Building a business – the WebPros story
What is it that defines a business – being incorporated? Having a board? A standalone set of accounts?
When we first came across the operations at the heart of Plesk, the market-leading web-hosting software platform that forms part of Oakley’s portfolio company WebPros Group, it had none of these things.
At the time, in 2016, the business that ultimately became WebPros consisted of a suite of clever software products owned by a larger group called Parallels. We were excited about the potential of the software, but there were obstacles to overcome. While successful – the software supported millions of websites worldwide – it didn’t constitute a stand-alone business that was ready for investment.
The solutions were a complex carveout of these assets and the hard work to turn them into an independent business. We had to work out how the products could be separated from other parts of the Parallels operations and what their financial profile would be. We needed to create a corporate structure and standalone business operations.
This intricate process ended up taking about seven months, but the issues and challenges did mean we were able to acquire Plesk at an attractive multiple.
Navigating the carve-out of Plesk was a massive task, but was made more manageable thanks to the management team in partnership with Thomas Strohe and Jochen Berger, who are part of Oakley’s network of successful business founders, and who invested alongside us in the deal. Their knowledge and experience were instrumental in our due diligence process and then subsequently post acquisition in developing the business as a standalone operation.
We had worked with Thomas and Jochen on two previous successful investments in the web-hosting sector. The duo had started their first hosting business, Intergenia, when they were teenagers, and we invested in it in 2011. We also backed them in a successor enterprise, Host Europe, the web-hosting business that acquired Intergenia.
This made Thomas and Jochen the ideal partners to help us carve out Plesk and cement its position as a world leader in its space.
With Plesk established as a strong and growing independent business, it became apparent there was an opportunity to enhance it further through selective acquisitions, which we successfully identified and executed. Most notable of these was an American peer, cPanel.
As with Plesk, the prospect of acquiring cPanel was far from straight-forward, but for different reasons. The entrepreneur who founded and runs the business, Nick Koston, had rejected previous offers from potential private equity acquirers and was most concerned to preserve the unique culture of cPanel he had created over 20 years.
In Thomas and Jochen, however, he sensed he was dealing with like-minded entrepreneurs who like him had significant experience of the hosting industry, which opened the door to a deal. This was underscored by Oakley’s own heritage, having been involved in successful investments in the hosting industry, as well as having been founded by a business creator who had gone through the process of setting up and running successful businesses. This background has been key to our ability to secure deals to which most other firms would not have access, and helped us to reassure Nick that cPanel would be in good hands.
Nick’s overriding concern was for his staff and he was very focused on ensuring cPanel would not lose the things its staff valued, and that they would be treated well, once it became part of a larger group.
We have kept cPanel, which largely operates in the US, separate from Plesk, which has a more European focus, maintaining the individual cultures which make each so successful, but with a common ownership under a parent company, WebPros.
The enlarged group is now a leading software provider to the global hosting market and is well placed for further growth.