Reward Gateway, global leaders in enterprise employee engagement software, announces today that Great Hill Partners, L.P., a Boston based technology investor, has entered into a binding agreement to buy the company from current owners, Inflexion Private Equity. The deal, which values the company at £140 million GBP will fuel the continued expansion of products and technology for HR departments and will fund additional geographic expansion outside of the company’s current markets of UK, USA and Australia.
Blue Chip Clients
Reward Gateway is a £189 million revenue SaaS business employing 275 people in six countries and servicing more than 1,100 enterprise clients. Its technology powers employee benefits, employee recognition, total reward statements, employee communications and employee engagement. Clients include IBM, American Express, Diageo, Heineken, McDonalds, Bloomberg, Unilever, DHL, Bayer, AT&T, Yahoo!, AOL and Groupon.
Shared Ownership Model Pays
Management and employees hold 40 percent of equity between them through Reward Gateway’s shared ownership scheme. Today’s deal triggers a shared payment of c.£6.5 million to all 269 employees below board level in six countries.
The management team, led by founder Glenn Elliott, is staying with the company and become significant co-investors alongside Great Hill Partners. Post-deal the shareholding owned by staff and management increases to 45 percent.
Fast Growth led to Category Leadership
Reward Gateway was founded in London in 2006 and has grown quickly to lead the fast growing market for employee engagement technology. Revenues jumped eight fold from £0.5m in the first year of trading to £4m by 2011. Inflexion Private Equity invested at an enterprise valuation of £25.5 million in December 2010. In the past four years, client revenues have grown six-times over, EBITDA 10-times and client numbers from 400 to 1,100, with acquisitions of software specialist Dazines Ltd in the UK, API Leisure & Lifestyle, the oldest benefits provider in Australia, and the opening of a successful New York office.
Headquartered in London the business operates in the UK, Australia and USA with a global support and software engineering centre in Plovdiv, Bulgaria. UK clients include Sky, ITV, Specsavers, Welcome Break, Aviva, Transport for London, Cancer Research UK and Ladbrokes.
The Reward Gateway management team plan to use the investment from Great Hill Partners to propel the company’s future US operations; and in Australia, where the business leads the market following the recent acquisition of API.
Reward Gateway’s founder and CEO Glenn Elliott said: “We’ve had an amazing four and a half years with Inflexion and we are a stronger and more successful company thanks to their support. Their backing has enabled us to invest heavily in expanding the services we provide to HR and scale the business internationally. As an investor, they set the bar high and it’s taken careful consideration to find a partner that could really help us on the next stage of the journey. I really am delighted to have found that in Great Hill Partners. They’ve been incredible since the day we met them and with their experience of HR and technology really share our vision for the product and our global opportunity.”
Why Employee Engagement Pays
He continues, “Employee engagement has become central for a number of forward thinking successful organisations. They have realised that engaged employees make better decisions, as they understand more. Engaged employees are more productive, as they enjoy what they are doing. And engaged employees innovate more, as they want their organisation to succeed. Our success is testament to this”
Chris Busby, Partner at Great Hill Partners said: “We are delighted to back Glenn Elliott, the management team, and Reward Gateway in their next phase of development. The business has been at the forefront of innovating in employee benefits, reward, and engagement for nearly 10 years. We have found a fantastic business, dedicated to the success of its clients and led by a world-class management team. We are excited to be backing Glenn and his team as they expand their product portfolio and launch into new geographies.”
Reward Gateway was recently ranked 25th in the Sunday Times International Track 2015 as the fastest-growing, mid-market HR sector firm based on impressive overseas sales of £8.7 million in 2014.
Today sees the Reward Gateway divide circa £6.5 million among its team. Employees below management level own five percent of the company through its Employee Share Plan. A typical employee who has been with the company for several years will earn an amount similar to their annual salary. Over 100 employees who have joined the company since the last share allocation in 2014 will all benefit from a whole month’s extra salary paid as a bonus. This is the second time the company’s employees have shared in financial success – over £1 million was shared among 70 employees in 2010 when Inflexion bought a majority stake. CEO, Glenn Elliott has already announced that a third similar programme for staff will launch in the coming weeks.
Reward Gateway were advised by David Silver from investment bank Robert W. Baird & Co with Nick Jones from Cavendish Corporate Finance LLP advising the management team on their re-investment. Legal Counsel for the company was provided by Tim Hewens at Squire Patton Boggs LLP. The buyer, Great Hill Partners was advised by DC Advisory and represented by Kirkland & Ellis LLP. Debt finance was provided by TPG Capital who were represented by Macfarlanes LLP. Inflexion Private Equity was represented by Jones Day LLP.