Stories
At the beginning of last February, I interviewed Eoin Goulding, the founder and chief executive of Integrity360. The 44-year old spoke about his ambitions for Ireland’s biggest cybersecurity firm, which he founded at the age of 28, and grew to sales of €42 million in 2020. At the time, Goulding spoke about his plans to expand into Britain and expressed caution about raising private equity, noting that with €12 million on its balance sheet, Integrity360 could afford to go it alone.
Over the years, Goulding had rebuffed plenty of potential suitors, but at the beginning of 2021, he started to think about what was next. He had built up his management team in 2020 with new hires like Peter Smyth as his chief operating officer from Version 1, Patrick McHale as his chief financial officer from Taoglas, and Ronan Kelly from BT, while retaining an experienced team of some 200 people.
“My biggest lesson in the journey is bringing external people in quicker who have the experience of running large companies is key,” Goulding reflected. “Since day one, I’ve tried to surround myself with the best people and they have helped to make the business what it is today. If you trust people and respect them you will get their loyalty in return.”
Goulding knew to hold on to his team and continue to grow, he needed more firepower. But what was the best way to do it?
Acquisition targets
He first asked three sets of Irish corporate finance advisors and one British house to identify potential acquisition targets mainly in Britain, but also in Europe.
He then asked them to tell him about how he could finance buying these businesses using debt. The third thing he asked them to do was to value the business. “I told them we’re thinking of acquiring companies, and I want to know what’s out there, how do we finance it, and what’s Integrity360 worth,” Goulding recalled. Each of the advisors came back with a valuation of roughly the same number X, based on where the business was at that moment.
Goulding had been flat out building up Integrity360 from scratch for 16 years, and he figured he had at least another three years to go before he would feel ready to sell. “Then I thought about, what if I get the price I want in three years, now,” he said. Goulding’s CFO McHale had recommended working with Hazel Cryan, a director of corporate finance in KPMG. Cryan advised that there was a private equity firm in London called August Equity that would like to talk to him.
Goulding had never heard of them, but he started to make inquiries quietly about the firm led by Philip Rattle, a former partner in JP Morgan. Goulding knew people who had dealt with August Equity before, and the feedback he got was good. It specialises in scaling privately-owned, service-orientated companies, and it tended to invest between €10 million and €50 million.
Goulding told McHale and Cryan he liked the look of August Equity but said that he didn’t want to be the chief executive if they agreed on a deal.
“Usually in these cases, people still want to be the CEO, before eventually they are moved sideways. I didn’t want that. I am a classic entrepreneur in that I create chaos,” he laughed. “I wanted someone to come in and create the structures to help us scale quickly. I wanted to help with that, and still be involved, but I knew we needed someone new.”
August Equity came back with a price of X plus Y. Goulding turned down this price, so August Equity came back with an improved offer of Z. It also proposed putting in Ian Brown as executive chairman, and Matt Tomlison as head of its British operations. Brown had been executive chairman of another August Equity portfolio company called SecureData sold for £120 million to Orange in 2019.
SecureData was also a cybersecurity company. Through a combination of organic growth and acquisitions, Brown had delivered a 7.5 return on investment in just over three years for August Equity, winning a prize for Small Buyout Exit of the Year at the British Private Equity Awards.
A call was arranged between Goulding and McHale, with Brown and Mehul Patel, a partner with August Equity, and his colleague Richard Muckle, a director.
Both parties agreed that they would not leave the call until the deal was finalised. Goulding had made it clear at the outset that he would not agree to any chipping away of the final agreed sum and August, true to their word, did not backtrack. Now the deal was really on. On March 12, a term sheet was signed.
*****
There was still however a lot to be done to close the deal. Goulding thought about who he wanted as his legal advisors. Integrity360 used three different firms for different aspects of his business, but he decided to go with Gerry Beausang, a partner in Byrne Wallace.
Over the years, after his children went to bed, Goulding would go for walks with his dog along the canal from his home in Rathmines into town and back. He would think about his business, and would occasionally ring Beausang for advice. Beausang never raised an eyebrow at being called at 9pm, nor did he ever charge for these calls. “I didn’t forget that,” Goulding said. “He was always very supportive, and gave great advice.”
Byrne Wallace put a tight team together to work on the deal, including senior associate Daniel Holohan and corporate solicitor Bianca McLaughlin. Cryan and her team in KPMG, meanwhile, put together the data room required by August Equity.
Three months of intense work lay ahead as both sides combed over every aspect of Integrity360. But then in the middle of everything, at 4am on May 14, 2021, the entire Health Service Executive was hacked by a criminal gang demanding millions for the return of its data.
As Ireland’s biggest cybersecurity provider, Integrity360 was in the thick of dealing with the fallout of the attack. This went much further than just the health service, as suddenly executives across Ireland’s business community sought reassurance that their data was safe.
Integrity360 was inundated with enquiries from firms seeking to beef up their security, during a period when cybersecurity led the news headlines daily as the state’s hospitals and healthcare services struggled to cope. Integrity360’s team of 200 people was flat out dealing with this surge.
Yet behind the scenes, the deal kept moving forward. Just as August Equity didn’t seek to chip bits off the agreed price, Goulding didn’t try to push it up despite the promising sale leads coming in, boosting Integrity360’s potential revenues.
Both teams were working well together, and the sales process didn’t slow despite all the commotion caused by the hack. On August Equity’s side, the process allowed Integrity360 to get to know its team including Patel and Muckle, who oversaw the investment.
Two late nights and a leak
On Thursday, June 17, Goulding went into Byrne Wallace’s office on Harcourt Street at 9am to close off the deal, along with McHale. With them were Clara Leao, Integrity360’s head of finance, and Shayna Damonse, Integrity360’s corporate finance manager.
There were all sorts of things to consider from shareholder purchase agreements to disclosures to tax, creating a mountain of paperwork that had to be reviewed and signed. It was onerous work. At about 8pm, Goulding discovered that Byrne Wallace had a fridge full of bottles of Birra Moretti and, reinforced, the team continued working on closing the deal until 2am, but they didn’t get there.
The next day, work began at 9am again in Byrne Wallace, before the deal finally closed at 1.30am. Goulding went home exhausted, with a plan to tell staff about August Equity’s investment first thing on Monday morning.
There was a leak, however, and the story appeared on page 1 of The Sunday Times that weekend which necessitated Goulding emailing the entire company later that day, confirming that August Equity was taking a majority stake in the business.
“As you are aware from previous company updates, we have been actively building our growth strategy with a vision of becoming the leading cybersecurity specialist in the UK and Ireland with the best people, delivering best practice service and solutions,” he wrote.
“We will use this investment to turbocharge this vision and growth of Integrity360 alongside an extensive acquisition programme across the UK and then into Europe. Integrity360 will be the anchor platform as we realise our new ambition of being the leading end-to-end cybersecurity company in Europe. I would expect that we will have our first acquisition completed within the next four months in the UK.”
Goulding also announced that Brown and Tomlinson were coming on board and that he was moving to the new role of group president. He was careful to stress that with the new investment came new opportunities.
“Growth and investment will create further career opportunities in the business across all departments along with continued investments being made in training and innovation,” he said.
“On a personal level, this is the next stage of my own journey in my career. I really value being involved in Integrity360 and seeing the company and employees grow and develop year on year. I would like to thank you all for the hard work each one of you has put in and how each of you contributed to our unique culture in such a positive way.”
*****
The following Monday, Goulding briefed his 200 staff, and that afternoon Brown was introduced to them. The feedback was extremely positive, he said. “We knew we wanted someone who understood the importance of our culture and what we’re all about, and that’s why we chose August,” Goulding explained. “They are growth investors and they see a long runway of growth for the business. Their aspiration mirrors ours, which is to build something of significant scale.”
“With the added benefit of having Ian and Matt come in through the partnership, this was a huge draw as they are very knowledgeable and credible in the industry and they know it inside out. I’m looking forward to learning a lot from them too as we grow.”
When I interviewed Goulding earlier this year, he spoke about reaching sales of €100 million, and growing not just into Britain but also Europe and North America, where it already has footholds.
“We’ll definitely be aiming to speed up the target time frame on our €100 million milestone, and build on it even further,” Goulding said. “By partnering with August we are now moving to increase our revenue goal to €200 million.”
“We always knew that in order to get to that figure we would need investment and that we would achieve it by organic growth and acquisition. This is the next step in that plan and we have an exciting few months and years ahead of us on the journey.”
“It doesn’t make sense to just sell to anyone. It is important to do your research.”
Goulding said he would advise business owners to consider going the same private equity route. “Most founders always want to do two more years, and then sell,” he said. “But with negative interest rates, private equity funds are flush with money so it is always worth considering.”
“The amount of money going around is insane,” he added. “But it is important to pick the right partner. We were always getting contacted by PE firms because we had a good business, with no bank debt, in a sexy space. It doesn’t make sense to just sell to anyone. It is important to do your research.”
“Once we had the data room up and going, we could have run a competitive bid process if we’d wanted, but August Equity was a good fit for us, so we didn’t,” he said.
“We’d built up a strong team not to sell the business, but to make acquisitions,” Goulding said. “I would advise business owners to consider getting a valuation on their business, and just testing very discreetly what the market is like.”
Goulding said he couldn’t say how much he had sold the business for because of confidentiality reasons.
Combining the cash in the business, as well as the price paid by August Equity, makes it one of the more significant sales of an Irish privately owned business this year. Goulding started his first business at the age of 19 above a record store in Rathmines, selling PCs and servers. He never went to university, but instead pursued his passion for being an entrepreneur. He felt the time was right to sell a majority stake. “The sale was 100 per cent right for me,” Goulding said. “I was at it for 16 years. This investment will allow Integrity360 to become the largest independent cybersecurity company in Europe in the future.”
“I love working in the business, but it has been all the time.” The exit will, in time, allow him to look at other ventures outside cybersecurity, but Goulding said he remained committed to Integrity360.
“By becoming president, I won’t go cold turkey and leave the business. I don’t want to suddenly turn it off. I am still a considerable shareholder, and I want to help the business achieve its potential. Ireland is the anchor market for Integrity360, and I am really proud that it will form the basis of putting Integrity360 on the European map for cybersecurity.”
Further reading
The CEO of Ireland’s biggest cybersecurity firm on what to do about ransomware attacks
