Finance Monthly January 2020 Edition

50 www.finance-monthly.com TRANSACTION REPORTS SharpCloud Secures £4.5m Series A Investment From YFM Equity Partners Technical Due Diligence Adviser to SharpCloud: Financial Due Diligence Adviser to SharpCloud: Legal Adviser to SharpCloud: Commercial Due Diligence Adviser to SharpCloud : Can you tell us about your involvement in the transaction? Source Code Control conducted the technical due diligence. We were introduced to YFMEP through the BDO accountancy company (BDO are sponsors of the Thames Valley Barometer report and we had also featured in there). YFMEP is a progressive company who understood the need for technical due diligence as part of the investment. Technical due diligence is of much importance, especially during M&A transactions. Listing out the Open Source components used with their licenses and possible security vulnerabilities helps companies and the investors to evaluate risk in the software. Taking these precautions has intensified as companies experience more outsourced development and digital supply chains. Furthermore, software development has become a core element of business value and such due diligence helps us valuate the business at hand. What was your specific role? Our role was to provide YFMEP with an understanding of the quality of their investment so both parties can get a “stop-check” by an independent 3rd party which assesses: • The software components in use; • How well the security is being addressed i.e. patched and kept up to date; • Copyright and licensing issues. What were some of the key challenges that you were faced with and how did you overcome them? We had a few challenges. YFMEP recognise the potential issues and SharpCloud had an excellent awareness of the topics. But that is genuinely rare. The norm is for organisations to overlook licensing and copyright and only manage security from the outside i.e. not built into the design. What makes this an important transaction? Software licensing, security management and copyright are three things which can radically alter the value of a company. Without controls, the software could be vulnerable, breaking licensing laws and open to ownership challenge! Definitely three things to clear up prior to investment. SharpCloud has raised £4.5M in funding from a new investor, YFM Equity Partners (“YFM”). This is the company’s first major round of investment, having initially funded by bootstrapping from some customer revenue and own savings (generated from the sale of Pertmaster Ltd). Adam Hart and Jamie Roberts led the investment for YFM. Hart commented: “SharpCloud are solving a key business problem that large organisations have contended with for many years - ‘how best to use the large quantities of data to inform complex decision making and to shape business strategy?’, removing the need to inform decisions using static slide deck presentations built upon hotchpotch datasets. We’ve been hugely impressed with Sarim & Rusty’s ambition and vision, as well as the culture the business has created in a short space of time. We are very excited about what the future holds and will work closely with the SharpCloud team to scale the business into an international success story.” Financial Due Diligence was provided by Nathan Willis and Brad McAvoy of James Cowper Kreston, tax structuring advice by Phil Snell and Emma Elliott of James Cowper Kreston, legal advice by Chris Reed and Niall McCooey of Gateley Plc, Commercial Due Diligence by Roger Penney and Geoff Rampton of RPL Ltd, Organisational Review by Anna Cornwallis of Stratton HR and Technical Due Diligence by Paul McAdam of Source Code Control. Paul McAdam Source Code Control www.sourcecodecontrol.co Q Q Q Q