How can you turn a carve-out into an independent success in just 2.5 years?

September 13, 2023
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Carving a strong but underloved business out of a larger entity can inject fresh energy and enthusiasm into a team. The independence and subsequent accelerated growth of premium software business Symfonia saw three acquisitions help double revenues in just over two years, illustrating the phenomenal impact an experienced partner with focus can have.


Carve-outs are hard work – but if done correctly, the rewards can dwarf the graft. Once agreements are finalised, attention shifts to establishing standalone systems and extricating IT – not for the faint hearted. The light at the end of the tunnel (which is usually a tight 12 months) can be a robust business led by a freshly invigorated team.

A private equity backer will make a previously non-core unit absolutely core to their vision,” stresses Kerim Turkmen, Partner at MidEuropa and deal lead on Symfonia.

He explains the resources an investor can bring to bear go beyond the capital; there is also the network of relationships to attract talent into the organisation. “We make sure it’s a success by putting in place the right governance model with the right team; we create motivation with focus, inspiring people to take the right decisions to create value.”

The story of the Polish software specialist illustrates the tremendous impact a well-executed carve-out can have. Established over 25 years ago, Symfonia is an important and longstanding part of the Polish IT landscape, providing around 50,000 Polish SMEs with FMS/ERP/payroll software.  It had been part of Sage Group plc since 2005, but like many corporates post-pandemic, Sage was looking to focus on its core markets. Symfonia had been resilient during COVID, with strong recurring revenues driven largely by subscriptions and low churn, so there was a lot of interest in the business.

They asked the right questions, and we spent a lot of time building a relationship with them since it was important to me that they understood the real challenges and opportunities. I met with a lot of investors and had numerous discussions, but I really appreciated the clarity and mutual trust we developed with MidEuropa,” Symfonia CEO Piotr Ciski recalls after meeting the MidEuropa team.

Indeed, this trust helped ensure the deal was seamless. “The relationship we built meant we could approach Sage with the ability to deliver a clean deal very swiftly,” explains Marek Rodak, Principal at MidEuropa involved in the transaction.

MidEuropa acquired Symfonia in March 2021, and in just over two years effected an operational and digital transformation which allowed it to enhance its cloud and SaaS (Software as a Service) capabilities and to upgrade its organic growth profile, enabling it to more than double in size. It wasn’t a cost-cutting exercise by any means – in fact, a doubling of revenues (mostly organic) was achieved with prioritisation of platform and product investment by MidEuropa and the management team. This led to a substantial increase in headcount, from c. 300 at the time of investment to c. 540 at present.

Our understanding of the sector as well as the local market dynamics allowed us to see Symfonia’s potential and help them to achieve it,” Kerim says.

Hard yards

The standout results within a compressed timeframe belie the hard work that made it happen. The intricacies of a carve-out are complex, typically involving a period of up to twelve months during which systems and processes are transitioned and transformed. If the year feels short, the days are long, but the jolting journey can be made smoother with an experienced partner.

Having started the process at the beginning of March 2021, Symfonia’s management executed on three undertakings: the carve-out and separation from Sage, involving myriad systems and agreements; the day-to-day running of the business; and planning and investing for the future. Ultimately this led to a full transition from a corporate subsidiary to an independent premium software business with a resilient recurring revenue model. Crucially, customers were not impacted, which Kerim describes as a testament to management’s ability to keep up the operations in spite of a demanding transition period.

As this time-consuming process was underway, MidEuropa and management set about progressing an ambitious M&A pipeline, which ultimately saw three strategic add-on acquisitions completed: HRTec, Reset2 and Cloud Planet. The three acquisitions enabled Symfonia to acquire new technology, consolidate existing market segments and also expand into new ones.

The swift action was the result of MidEuropa’s extensive pre-deal diligence into the sector, which meant it had a thorough understanding of the market drivers, as well as a list of numerous add-on targets.

MidEuropa had mapped the market and were therefore a big help in evaluating the ecosystem and acting decisively to close the right add-ons in short space of time,” Piotr says.

An experienced independent board was created, and the senior management team augmented, with MidEuropa drawing on its diverse network to bring in people to support the newly independent entity, including the appointments of an experienced Chair and a CTO with global blue-chip technology experience. A robust finance function was organised, headed up by a new world-class CFO and Symfonia’s development team, which had previously been underprioritised, was substantially enhanced and improved. “Our new set-up and re-energised mission, as a private equity-backed business, allowed us to attract top-tier talent, it really helped us to build the business,” Piotr recalls.

This fresh talent combined with the existing team worked together to drive success, and in the summer of 2023 Accel-KKR, a global technology investor focused on software and tech-enabled companies, agreed to acquire a majority stake in Symfonia. MidEuropa, convinced the business has further to go, retained a significant minority stake to continue contributing to and benefiting from future value creation.