eFront, which provides technology to private equity (PE) and alternative investment firms, has acquired AnalytX in a move to expand its coverage to small and mid-sized firms.
eFront has pursued several acquisitions in the past year, and Olivier Dellenbach, its founder and CEO, says that in most cases the provider has sought tie-ups with products that will complement and easily integrate with its own—such as its recent purchase of Investment Cafe, an investor reporting portal.
The AnalytX acquisition was born differently, however—out of familiarity.
"We've faced them for several years, with some overlap in terms of potential clients, and it always seemed to shake out with us as the higher-end, configurable solution on one hand, and their offering suited more toward firms that were looking for something out-of-the-box, on the other," he says. "We decided if we really want to serve the entire PE and alternatives industry, eFront had to be able to sell more efficiently at the mid- or low end of the market, and from a product perspective, it's always difficult to stretch between the two extremes as a single provider. So, simply put, this meant buying the strongest player in their space."
AnalytX's clients strike a wide range. In the past few months it has signed MG Stover & Co., a new third-party administrator based in Colorado, and finished a nine-month implementation with Société Générale’s Paris-based PE principal finance team, to cite two examples. Dellenbach points out that, in terms of assets, there are no hard-and-fast lines that determine what makes a “large” versus “mid-tier” PE firm—though some historical observations can be made.
"It really comes down to the complexity they face," he says. "With a few exceptions, most venture capital (VC) firms are probably more suited to AnalytX, whereas larger limited partners (LPs) and fund-of-funds, or GPs working in complex buyouts with investment vehicles that cross borders, probably need something more customizable in terms specific platform pieces—fund accounting or portfolio management, for example—which is eFront's expertise. So it's about properly segmenting this market, targeting the right offer to the right client."
We decided if we really want to serve the entire PE and alternatives industry, eFront had to be able to sell more efficiently at the mid- or low end of the market, and from a product perspective, it's always difficult to stretch between the two extremes as a single provider. So, simply put, this meant buying the strongest player in their space.
As a result of the deal, eFront will now have more than 700 users, which Dellenbach calls a "huge footprint" among private equity technology providers. The new pairing will not change AnalytX's current product strategy, but does plan to push the eFront brand going forward, and also adapt the entire combined range of products to the AltExchange data standard—an initiative eFront helped launch earlier this year with several of its largest GP and LP clients.
Meanwhile, the acquisition will allow AnalytX to expand its geographical exposure by leveraging eFront's larger presence on the ground in emerging PE markets, especially in Asia.
"At the end of the day we've competed with AnalytX, but at the same time we also appreciated what they were doing. After discussing this for several months, there's good trust between the two of us—including between their CEO, Donald Winger, and myself—and I think we're all keen to expand," Dellenbach says.
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