IRIS Software Group secures major US investment from Leonard Green & Partners
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IRIS Software Group secures major US investment from Leonard Green & Partners
Co-controlling investment will support IRIS as it scales as a global leader in accountancy, payroll, HR and education mission-critical software and services.
New US-based investment will support IRIS as the business continues to scale in North America, executing its long-term strategy with strong executive leadership and an exceptional track record.
Leonard Green & Partners, L.P. (LGP) to take a co-controlling stake alongside Hg, who is re-investing in the business, acknowledging Hg’s strong 20-year relationship and experience working with the IRIS team.
ICG shares LGP’s and Hg’s belief in IRIS’s upside potential in North America and will remain as a minority investor in the business through a new investment.
Investment represents one of Europe’s largest software buyouts for 2023, valuing IRIS at an Enterprise Value (EV) of around £3.15bn.
Los Angeles, CA, US and London, UK. 23 December 2023. IRIS Software Group (IRIS), a leading global provider of mission-critical software and services in accountancy, payroll, HR and education, today announces it has secured a co-controlling investment from LGP, a Los Angeles-based private equity firm, in a transaction valuing the business at an EV of around £3.15bn.
LGP will take a co-controlling stake in the business, supporting IRIS’s US expansion ambitions with its local presence and network. Hg, a leading investor in European and transatlantic software and services businesses, will retain a co-controlling stake in IRIS in acknowledgement of Hg’s transatlantic capabilities and strong 20-year relationship and experience working with the IRIS team. As part of the transaction, ICG will remain as a minority investor in the business.
With 80% of customers remaining with IRIS for five years or more, the business has firmly established itself as a trusted leader with a strong reputation. This has contributed to significant growth over the last five years, both organically and through acquisitions, enriching and improving its customer offering, whilst delivering revenue and EBITDA growth rates of 20% CAGR. Today IRIS has a rapidly growing presence in North America – which now accounts for over 25% of group revenues.
“To secure backing from a leading US investor in LGP, alongside the continued support of Hg and ICG, underscores IRIS’s enduring success over many decades. Our unparalleled product portfolios combined with excellent customer service have resulted in IRIS being a leader in our sectors. We have also expanded our country presence with a notable focus on the US, so LGP’s local expertise will be instrumental in our acceleration to a world-class transatlantic business.”
Elona Mortimer-Zhika, CEO of IRIS
Starting 45 years ago with accountancy software, IRIS has evolved to be relied on by more than 100,000 customers. Today, the business handles $18 billion of payroll payments annually in the US and Canada, and processes six million pay slips worldwide each month. One in six of the UK’s workforce is paid by IRIS payroll offerings, and more than 850,000 UK employees are managed by IRIS HR solutions.”
IRIS has a broad UK education software suite with more than 12,000 UK schools and academies using its solutions. More than 4 million parents and guardians benefit from IRIS’ parent engagement apps to connect with their child’s school, with 300 million messages delivered annually between schools and parents.
“We are incredibly excited to partner with IRIS, whose leadership, value-based culture and reputation for excellence align with the key characteristics we look for in the companies we invest in. We very much look forward to working with Elona and the rest of the management team, as well as Hg and ICG, to accelerate the next phase of IRIS’ growth.
Usama Cortas, Partner at LGP
IRIS was Hg’s inaugural investment into the Tax & Accounting software sector in 2004. Hg has been an investor in the business ever since, during which time the firm has invested around $10 billion in the wider tax and accounting software segment across Europe and North America.
“IRIS and Hg have a long history, evolving together over the past 20 years. We’re delighted to now partner alongside LGP to accelerate IRIS’ US ambitions. Now, more than ever, we recognise Elona and her team as leading a high-quality software and services business, digitising a sector still in the early stages of its software adoption, with tremendous opportunity still ahead.”
Nic Humphries, Senior Partner, Hg.
Closing is subject to customary regulatory clearances.
Arma Partners and Rothschild & Co acted as corporate finance advisors to Hg. Jefferies International and William Blair acted as financial advisors to LGP. Legal advisors included Skadden and Linklaters for Hg; Latham & Watkins for LGP and Ropes & Gray for ICG.
IRIS: UK and US: Sara Lewis | firstname.lastname@example.org
Hg: UK: Tom Eckersley | email@example.com |
About IRIS Software Group
IRIS Software Group is a global provider of mission critical software and services, and one of the UK’s largest privately held software companies. IRIS provides software solutions and services for finance, HR and payroll teams, educational organisations, and accountancy firms that takes the pain out of processes and lets professionals focus on the work they love. Through simplifying, automating and providing insights on everyday mission critical tasks for organisations of all shapes and sizes, IRIS ensures customers can look forward with certainty and confidence.
One in six of the UK’s workforce is paid by IRIS payroll offerings, and globally, six million employees receive their payslip via IRIS software every month. IRIS handles $18 billion of payroll payments annually in US and Canada. Over 12,000 UK schools and academies use IRIS, with four million parents and guardians using IRIS apps to connect with their children’s school; 300 million messages are delivered between schools and parents each year, and over £15 million transactional payments are processed every month. IRIS is certified as a Great Place to Work® in UK, Ireland, India, Canada and USA and recognised as one of The Times Top 50 Employers for Gender Equality in 2023. IRIS is also recognised as one of the Best Workplaces for Wellbeing, one of the Best Workplaces in Tech and one of the Best Workplaces for Women.
About LGPLGP is a leading private equity investment firm founded in 1989 and based in Los Angeles with $70 billion of assets under management. The firm partners with experienced management teams and often with founders to invest in market-leading companies. Since inception, LGP has invested in over 120 companies in the form of traditional buyouts, going-private transactions, recapitalizations, growth equity, and selective public equity and debt positions. The firm primarily focuses on companies providing services, including consumer, healthcare, and business services, as well as retail, distribution and industrials. For more information, please visit www.leonardgreen.com.
Hg supports the building of sector-leading enterprises that supply businesses with critical software applications or workflow services, delivering a more automated workplace for their customers.
This industry is characterised by digitisation trends that are in early stages of adoption and are set to transform the workplace for professionals over decades to come. Hg’s support combines deep end-market knowledge with world class operational resources, together providing compelling support to entrepreneurial leaders looking to scale their business – businesses that are well invested, enduring and serve their customers well.
With a vast European network and strong presence across North America, Hg’s 400 employees and $65bn in funds under management support a portfolio of more than 50 businesses, worth over $135 billion aggregate enterprise value, with over 100,000 employees, consistently growing revenues at more than 20% annually. Additional information is available at www.hgcapital.com.
ICG provides flexible capital solutions to help companies develop and grow. We are a leading global alternative asset manager with over 30 years’ history, managing $81bn of assets and investing across the capital structure. We operate across four asset classes: Structured and Private Equity, Private Debt, Real Assets, and Credit.
We develop long-term relationships with our business partners to deliver value for shareholders, clients and employees, and use our position of influence to benefit the environment and society. We are committed to being a net zero asset manager across our operations and relevant investments by 2040.
ICG is a member of the FTSE 100 and listed on the London Stock Exchange (ticker symbol: ICP). Further details are available at www.icgam.com. You can follow ICG on LinkedIn, X (Twitter) and Instagram. Past performance is no guarantee of future results.