Target Information

HgCapital, the prominent European private equity investor, has completed an off-market acquisition of e-conomic, a leading SaaS (Software as a Service) accounting company based in Copenhagen. Founded in 2001, e-conomic has established itself as the largest SaaS accounting provider for SMEs in Europe, boasting approximately 60,000 customers for its core product. Additionally, the company has around 100,000 users of its freemium invoicing and expenses tool, Debitoor. e-conomic primarily serves its home market of Denmark while also extending its reach to eight other European countries, including the UK, Nordics, Germany, and Spain. Through its innovative products, e-conomic enhances the efficiency and flexibility of accounting practices for its diverse customer base.

Industry Overview

Denmark's software sector, particularly the SME SaaS segment, has seen significant growth in recent years, driven by a rising demand for digital solutions among small and medium-sized enterprises. As companies increasingly shift their operations to online platforms, accounting software that provides flexibility and efficiency has become essential. The growth potential within this industry is further bolstered by the acceleration of digital transformation worldwide.

The European market for accounting software is expected to expand as SMEs recognize the benefits of cloud-based solutions. There is a growing trend towards the adoption of subscription-based models, offering businesses predictable costs and ongoing updates, making accounting software more accessible.

In Denmark, government support for digital innovation and favorable business conditions have fostered a conducive environment for software companies. As SMEs look for ways to streamline operations, accounting software providers like e-conomic are well-positioned to capitalize on this evolving market landscape.

Rationale Behind the Deal

This acquisition aligns with HgCapital's strategic focus on investing in leading mid-market growth companies within the European SME software sector. The firm recognizes the robust growth trajectory of the SME SaaS market and aims to leverage e-conomic's strong market presence to capture further opportunities. HgCapital plans to provide support to e-conomic's management team to enhance its operational capabilities and drive future growth.

Investor Information

HgCapital is a well-established private equity investor known for its concentration on the European technology and software sectors. The firm's expertise in identifying and nurturing growth-oriented companies positions it favorably to unlock value in its investments. With a track record of successful acquisitions and a commitment to fostering sustainable growth, HgCapital is equipped to support e-conomic in its next growth phase.

View of Dealert

From an investment perspective, the acquisition of e-conomic by HgCapital appears to be a sound decision. The rapidly growing SME SaaS market, compounded by ongoing digital transformations, indicates a promising future for e-conomic. The company's established customer base and proven product offerings provide a solid foundation for further expansion and innovation.

Furthermore, HgCapital's expertise in scaling businesses and its plans to create new jobs present a favorable outlook not just for the company but also for the broader economy in Denmark and beyond. The focus on enhancing e-conomic's operational efficiency and customer offerings aligns with current market demands.

However, it is crucial for HgCapital to navigate any potential challenges that may arise due to market competition and evolving customer needs. Maintaining customer satisfaction and adapting to technological advancements will be key factors in ensuring that e-conomic maintains its competitive edge.

Overall, this investment represents a strategic move for HgCapital and positions e-conomic to become a leader in the global cloud-based accounting sector, benefitting both the company and its stakeholders.

View Original Article