Target Information

DL Software, founded in 2003 and headquartered in Paris, has established itself as a prominent player in the vertical ERP market software space. The company specializes in providing solutions across various sectors including Retail, Healthcare, Wholesale, Insurance, Tourism, and Real Estate. Over the years, DL Software has successfully restructured its organization and optimized its organic growth, backed by 21 Invest France, to accelerate its buy-and-build strategy aimed at consolidating its market position.

In 2017, 21 Invest France recognized the potential of DL Software and engaged in a primary-to-primary transaction to invest in the company. This investment was part of a broader plan to reinforce the group's stance in the sector and to emerge as a market leader. The vertical ERP market is characterized by its fragmentation, presenting opportunities for growth through acquisitions and further development.

Industry Overview

The vertical ERP software market is gaining traction across Europe, with an increasing number of businesses seeking customized solutions tailored to specific industry needs. This trend reflects a growing understanding among enterprises regarding the benefits of vertical software, such as operational efficiency and enhanced data management. The European market, particularly in France, is notably resilient, with businesses investing in technology to streamline operations and achieve digital transformation.

In France, the ERP software sector has seen significant growth fueled by the demand for innovative solutions that can address specific operational challenges within various industries. Companies are increasingly adopting cloud-based services, enabling them to leverage scalability and flexibility. Furthermore, the pandemic has accelerated the need for digital transformation across sectors, thus propelling the growth of specialized ERP solutions.

As businesses continue to face sector-specific challenges, the demand for tailored ERP systems remains robust. Vertical ERP providers are positioned advantageously as more companies opt to invest in specialized software solutions that offer greater customization and efficiency. The fragmented nature of the market creates numerous opportunities for consolidation, paving the way for strategic growth through acquisitions.

Rationale Behind the Deal

The decision to invest in DL Software was driven by the identified resilience and attractiveness of the vertical ERP software sector, which is characterized by its fragmented landscape. 21 Invest recognized the potential for DL Software to execute a successful buy-and-build strategy, enhancing its service offerings while capturing a larger market share. By establishing a strong platform company, 21 Invest aimed to leverage its strategic investments to drive rapid growth and market consolidation.

Additionally, the firm's proactive measures to manage the transition of leadership and establish KPIs aligned with industry standards fortified DL Software's position for sustainable growth. The focus on both organic growth and acquisitions allowed for diversification and strengthened the company’s market presence.

Investor Information

21 Invest is a recognized investment firm in France, known for its commitment to nurturing businesses through financial support and strategic guidance. With a clear focus on fostering growth in portfolio companies, 21 Invest has positioned itself as a key player in the private equity landscape. Its involvement with DL Software showcases the firm's ability to identify potential in high-growth sectors and implement strategies that lead to successful exits.

After initiating its investment in DL Software, 21 Invest facilitated a managerial transition that enabled experienced leadership under CEO Jacques Ollivier. The firm's strategic vision for DL Software not only led to substantial organic growth but also paved the way for a holistic buy-and-build strategy to scale the company into a leading market position.

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The investment in DL Software represents a compelling opportunity given the company's strong management team and its proven track record in the vertical ERP market. The focus on a buy-and-build strategy, combined with a solid transition in leadership, indicates that the firm is well-positioned for future growth. The successful completion of eight acquisitions in merely four years highlights the effectiveness of this approach, demonstrating the scalability and demand for specialized ERP solutions.

Moreover, DL Software's commitment to sustainability and the establishment of its ESG charter reflects an awareness of contemporary business practices that resonate well with modern investors. The improvement in its ESG rating from B+ to A signifies the group's dedication to responsible operations and could potentially enhance its attractiveness to future investors.

The decision by 21 Invest to reinvest in DL Software as a minority shareholder also signifies confidence in the company's long-term growth trajectory. With further consolidation opportunities still present in the market, DL Software is poised to continue its significant growth journey, offering potential for lucrative returns in the coming years.

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