Advanced, one of the UK’s fastest growing software companies, has agreed to buy legacy modernisation specialist Modern Systems for an undisclosed sum, its third acquisition in less than two weeks, according to CFO Andrew Hicks.
The acquisition is private equity-backed Advanced’s seventh in the past 18 months, with previous buyouts including ERP specialist Hudman, Science Warehouse and Canada’s Information Balance; most recently the company snapped up workforce management provider Kirona, as it builds out its software platform.
The deal follows Advanced’s largest contract yet: a £40 million software licencing agreement inked in 2018 with the Department for Work and Pensions.
Expansion is being bankrolled by owner Vista Equity Partners, which has $46 billion under management.
Today’s deal will “accelerate its growth plans in the booming application modernisation market”, Slough, Berkshire-based Advanced said today, as well as giving it a significant US footprint and more expertise in the mainframe space.
Advanced is the UK’s third largest provider of business software and services with a £254 million annual turnover, 16,000 customers and 2,200 employees. Its healthcare portfolio includes patient care management and clinical software solutions, while its enterprise suite includes financial management, HR, payroll, CRM, and document management solutions. Other focused business solutions include ticketing, fundraising, and legal practice management.
CFO Andrew Hicks told Computer Business Review in a call: “The application modernisation market is a buoyant one, with people with the skillset at a premium… Customer demand varies by organisation: we can help with a full cloud migration, with a language conversion; various flavours of modernisation.”
Asked about the outlook for Modern Systems staff, he added: “We looking to grow more than contract and the CEO of Modern Systems will stay on as part of our leadership team. Their team will stay in Dallas… It gives us improved reach in the US; we’re looking at expanding our vertical capabilities.
Advanced Buys Modern Systems: Sees Immediate Revenue Boost
Gordon Wilson, CEO at Advanced, said: “The [deal] will fast-track our ability to deliver a broader set of solutions, expand our footprint in the US and globally, and help us further infiltrate the legacy mainframe market.”
The deal will see Advanced grow its application modernisation revenue immediately by approximately one third, taking its revenues to in excess of £30 million and present an extended market opportunity from $6.87 billion to an estimated $16.67 billion.
Advanced has partnered with Modern Systems since 2016, collaborating together on a number of projects, including for the Department for Work and Pensions.
As a global provider of modernisation solutions for legacy application source code, data and platform transformations, Modern Systems brings 30 years of experience to Advanced, having completed 200-plus modernisation projects, with 1.5 billion lines of code processed, the two said in a release shared Wednesday.
Modern Systems focuses on conversions of legacy environments to cloud and microservices-based environments, via its Modernisation Platform as a Service offering. It has conducted a range of transformation projects for Fortune 1000 customers.
Brandon Edenfield, President and CEO at Modern Systems, says: “Monolithic legacy systems have been the workhorses of business computing for decades, with nearly 80% of the world’s corporate data residing on mainframes running technology more than half a century old.”
“While legacy systems provide power and stability, they lack the ability to adjust to newer, elastic forms of IT. Modern Systems has focused on providing leadership to customers to address this very challenge, leveraging proven technologies and processes that decrease risk and cost, while increasing competitive advantage. Together, as part of the Advanced family, we will be able to accelerate the delivery of our solutions to more customers globally.”