Menlo Park, California-based private equity firm Accel-KKR is backing the launch of M2 Technology Partners, a mid-market private equity firm targeting enterprise software businesses. Financial details were not disclosed.
Technology-focussed M2 will invest in domestic and international software companies requiring specific operational expertise or ready for consolidation. The firm is headed by former Epicor Software Corporation executives Mark Duffell and Michael Piraino. Duffell was previously the company’s president and chief operating officer, while Piraino served as executive vice president and chief financial officer.
“We’re backing the team which is part of our strategy, to back teams, but instead of backing a team with an asset, we’re backing a team to go acquire the assets,” Accel-KKR managing director Ben Bisconti told PEO.
During their time at Epicor, Duffell and Piraino grew the company from $30 million to $550 million in revenues through organic growth and acquisitions including Scala Business Solutions, CRS Retail Systems and NSB Retail Systems.
M2 said it would pursue a “build-up strategy” in enterprise software. “Our goal is to acquire companies along the way, growth them organically and also consolidate so that we’re a dominant player in a particular vertical market,” said Duffell.
M2’s strategy diverges from that of Accel-KKR in its goal to leverage the specific operational expertise of its management team.
“Generally [Accel-KKR is] backing an existing platform business, an existing management team, in a business that has demonstrated strong underlying economics where we can help them grow the business and take it to the next level,” Bisconti said of Accel-KKR’s strategy. “We don’t have the kind of operational expertise and domain expertise that Mark and Michael bring to the table.”
As an Accel-KKR portfolio company, M2 will tap Accel-KKR’s deal origination capabilities, network, capital and board-level assistance.
Accel-KKR expects to grow M2 and exit its investment in three to six years. Bisconti cited an initial public offering as one potential exit option also saying that M2 would be attractive to other private equity firms.
Accel-KKR is a technology-focussed private equity firm affiliated with early-stage technology venture firm Accel Partners and mega-firm Kohlberg Kravis Roberts. Founded in 2000, the firm specialises in making majority investments in mid-market technology companies with revenues between $15 million ($9.7 million) and $150 million.