Investment partnerships affiliated with Hellman & Friedman LLC, a leading global private equity group specialising in various service sectors including software, financial services and media, has majority funded the £500 million merger and recapitalization of IRIS Software Group Limited and Computer Software Group – the latter best known in the UK legal market as the owner of the AIM, Videss, Laserfotm and Mountain legal software businesses. The enlarged business has combined pro forma revenues of over £100 million and will trade under the IRIS brand umbrella.

Both businesses have been acquired from HgCapital, which will remain a significant shareholder in the combined Group. Lloyds TSB Development Capital (LDC) will exit from its longstanding investment in IRIS. H&F will be the majority shareholder while management, employees and HgCapital will remain substantial shareholders. Bank finance and acquisition facilities have been provided by Citigroup and Credit Suisse. Martin Leuw, Chief Executive of IRIS will become Group Chief Executive of the enlarged Group. He will be joined on the Board by Neal Roberts, IRIS CFO who will become Group CFO and Vin Murria, the CS Group Chief Executive (who will become Chief M&A Officer). H&F will be represented by Patrick Healy, Stephen Duckett and Luca Velussi who will join the Board as non-executive Directors.

Commenting on the deal, Vin Murria said “The combination of IRIS's market leading solutions (the software is used by around 15,000 accountancy organisations) and highly successful operational capabilities are hugely complimentary to CS Group's M&A driven growth and niche market focus. This is an exciting opportunity to dynamically grow a successful customer centric business that can only be positive for all clients and employees alike. We too are delighted to have the backing of Hellman & Friedman.”

Stephen Duckett, Managing Director at H&F said “Both IRIS and CS Group are exceptional businesses with strong positions in key verticals, high levels of subscription revenue and tremendous future growth potential. They have produced strong organic growth by delivering a high-quality product set and market leading levels of customer service, demonstrated by exceptional customer retention levels. The strategic logic for this business combination is very sound and we have successfully adopted a similar investment approach in the USA vertical software sectors. We see excellent opportunities for further organic growth supplemented by continued complementary acquisitions”.

• Here on the Insider its probably too early to make any comments on the implications of this deal – although its worth noting that it means the likes of AIM, Videss and Laserform have now had 4 different owners within the last 12 months.