Cinven’s matrix approach brings sectoral specialists together with regional experts to scope out opportunity, develop strategy, leverage local relationships and win deals. Julia Kahr, head of Cinven’s U.S. team and Rory Neeson, head of Cinven’s Business Services team, discuss how this approach paid off with the Cinven Funds’ acquisition of Archer.

Origination

In April 2023, Cinven signed a deal to acquire Archer, a US-based governance, risk and compliance (GRC) software and solutions provider. But the Cinven/Archer story actually started much earlier, back in 2020 when Cinven’s Business Services team in London identified GRC as a core investment theme given companies’ increasing focus on professionalising how they manage risk.

The Business Services team tracked many opportunities in the space and built strong relationships and a clear investment thesis across different business models. This included looking at several businesses in the overlap between services and software. What they found was a highly fragmented marketplace across Europe, with companies offering point solutions rather than comprehensive offerings.

At this point the Business Services team widened the search to the US in partnership with Cinven’s US regional team, based in New York, to see how they might look at consolidation. Together, they started mapping the US market for possible investments and within 18 months the US team identified Archer and started to build relationships with the CEO and key stakeholders.

Archer was part of a conglomerate, and the ultimate owners Clearlake Capital and Symphony Technology Group were looking to sell. Importantly, its suite of products was broad and well-integrated, and its management were keen to accelerate their growth in Europe. It had huge potential to accelerate growth under the right ownership and was a great fit for Cinven’s portfolio, and the multi-year journey which saw sector and regional experts collaborate to identify a highly attractive business is a great example of Cinven’s matrix approach in action.

Credibility

Cinven’s collaborative approach doesn’t stop at identifying attractive opportunities. It also helps Cinven to win in competitive auctions. With Archer, Cinven’s two teams started working together to build a pitch. Cinven’s US team identified Archer as a primary buyout opportunity that would benefit from repeat-play levers Cinven had pulled successfully in the Cinven funds’ other TMT investments: accelerated investment in technology and a focus on go to market excellence, including sales force productivity, strategic accounts, customer success and pricing. Along with that, the US team had also identified Archer as real “Cinven deal” fit given its aspirations to further internationalise into Europe. The Business Services team’s extensive research into the European market had identified possible merger and acquisition targets, giving Cinven credibility with management and putting us ahead of other potential investors.

The joint value proposition the US and Business Services teams presented to the management team around resources to accelerate organic growth and boots on the ground in Europe to drive M&A-led growth in Europe was highly differentiated.

The Cinven team really stood out from the rest of the buyer group from the beginning with their unique approach to accelerated investment in the business and the network to help us expand organically and inorganically in Europe.

Bill Diaz, CEO, Archer

So, what makes the matrix approach work?

When it comes to performance, knowledge is the big driver for investment firms. Too often, sector, thematic and local knowledge are siloed, resulting in missed opportunities and underperformance.

Cinven’s matrix approach avoids silos, instead promoting collaboration and knowledge-sharing. Sector teams will dig into emerging themes and validate and share them with regional teams who can look for investment opportunities locally. Cinven’s regional teams use their networks of founders, executives, advisers and investors to make introductions and validate the investment thesis.

There are 3 things Cinven does to make it work:

We’re consistent
All Cinven deals, whichever market they’re based in, are staffed by a combination of regional and sector experts. The combination of deep sector experience with local networks and knowledge is really powerful. It means that all the experience that Cinven has accumulated over Cinven’s 50 years’ in PE is pooled and applied to Cinven’s decision-making, giving us confidence that Cinven is unearthing the best opportunities, paying the right price, and pursuing the right strategy in and across each of Cinven’s markets.

We create the right environment
For a matrix model to work, Cinven needs to foster a collaborative culture. Cinven puts a lot of effort into developing the environment that helps Cinven work together seamlessly. For example, new junior members of regional teams typically spend four to six weeks in London so they can start building relationships. Cinven also cross-staffs projects – the deal team that recently competed for a medical technology carve-out in the US included a member of the London healthcare team who spent some time in New York. Cinven regularly gets together on a global basis to foster close ties, and build respect and trust. Cinven celebrates successes together, and it also helps that Cinven’s review and remuneration systems reward collaboration.

We hire team players
Having the right people is essential. Cinven hires and develops individuals who have good emotional intelligence and like working in teams. This makes it easier to align around delivering the best results for the fund because when the best results demand teaming up, we’re naturally inclined to do so.

High conversion, high performance

The result is Cinven has people with deep sector knowledge and people with broad and deep local knowledge and relationships who Cinven can combine into project teams to get the best outcome.

Cinven’s collaborative approach increases Cinven’s credibility, generates trust and helps Cinven win. The sector-regional matrix is what underpins Cinven’s high conversion rate and Cinven’s ability to deliver investments for Cinven’s funds that in turn deliver outstanding performance.