What happened?
Since receiving a growth equity injection from Francisco Partners in 2017, Dynamo has made several acquisitions to strengthen and expand its product offering, September’s Imagineer acquisition being the latest. This deal further expands the company’s growing presence in recent years, achieved as a result of both sustained organic growth and significant M&A activity.
“By adding the Imagineer team and technology to the Dynamo family, we not only expand our platform’s offering, but increase our flexibility and speed of deployment,” Dynamo CEO Hank Boughner said. “Imagineer is a perfect partner as we solidify our leadership position in the hedge fund sector. We already are working closely with Imagineer’s management team to explore ways to unlock immediate value for our hedge fund clients.”
Of specific interest to Dynamo was Imagineer’s Clienteer platform, which streamlines fund sales and marketing activities while also enabling users to track investor transactions and account performance metrics. Its WebVision software provides fund managers with a fully customizable communications and reporting portal combined with a content management system. This allows clients to digitize the fundraising process and securely share information with their respective clients. Imagineer’s offering will help Dynamo boost its front office capabilities specifically within the hedge fund space.
Organic vs. Strategic Growth
We have seen a number of firms seeking to generate increased revenues from existing users through expansion from a front office focus towards middle and back office, and vice versa. There are two ways to achieve this: organic in-house development and strategic acquisition. Historically speaking, there have been mixed levels of success when firms have expanded organically in terms of developing products which can truly compete effectively against the leading 'point solutions' in each space and not just serve as an upgrade path for existing clients seeking the ease of maintaining fewer vendor relationships.
Although Dynamo had developed products which expanded beyond the firm's initial front office focus, after the Francisco Partners investment, the firm has focused primarily on acquiring products which were already viable and respected as ‘point’ solutions, allowing them to quickly enter new areas with mature solutions and build up expertise within the firm.
While the acquisition model has merit, there is addition risk vs. organic when it comes to the challenge of taking disparate products and creating one coherent platform, both in terms of look and feel and in terms of full integration of data across the suite. Then there are the cultural challenges which accompany any acquisition when teams are brought together. Effective post-merger integration is key when adopting such a strategy; an area where Francisco Partners’ significant experience can help reduce the risk of cultural and product conflicts.
Dynamo has done an admirable job at building their core competencies to date - a fact reflected in the regularity with which we see them in the final stages of consideration alongside focused point solutions for projects ranging from front to back office. We look forward to seeing how Dynamo integrates their latest acquisition as the company aims to provide additional value to both existing and potential new clients.
History of Post-Francisco Dynamo Acquisitions:
HoldingsInsight - 2017
Dynamo’s first acquisition, HoldingsInsight is a portfolio investments data capture and reporting service designed for multi asset class allocators. The acquisition was a strategic move aimed at addressing the LP market’s need for a total product offering, combining both software and data. HoldingsInsight’s offering helped Dynamo provide its LP customers with enhanced exposure analysis and due diligence capabilities, supplementing its in-house products.
Q-Biz Solutions (PEView) - 2018
Dynamo’s front- and middle-office functionality was complemented by PEView’s back-office automation capabilities, which helps users to streamline partner allocations and the resulting calls, distributions and account statements, in addition to flexible reporting and an integrated general ledger, so reports can be tracked and benchmarked in a central location. The two companies had been working together for years on behalf of many shared clients, and the acquisition further improved back-to-front office workflows by integrating PEView with the Dynamo platform.
Preqin Solutions (previously Baxon Solutions) - 2019
The acquisition of Preqin Solutions, a private equity portfolio monitoring, valuation, performance analysis, and ESG impact design and measurement solution, further improved Dynamo’s middle-office offering. The acquisition also significantly expanded Dynamo’s existing UK and APAC presence.
Communica - 2019
Communica is a CRM, investor servicing and compliance software for hedge funds. With its acquisition, Dynamo extended its presence in the European hedge fund market and added to its recent expansion in Europe and Asia.
Imagineer - 2020
The recent acquisition of Imagineer, a relationship management software that helps investor relations and fund marketing teams to effectively manage their clients and raise capital, is going to further boost Dynamo’s front-office solutions for the hedge fund industry.
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