What’s next for Epicor following its recent sale?

Introduction

Just last month, Epicor announced a sale from KKR to CD&R. There has however been a number of questions into what this means for Epicor and the reason for the sale since KKR only acquired the business in July 2016.

What’s next for Epicor?

We’ll explore what we know, the facts and what’s possibly on the horizon.

What we know

Clayton, Dubilier & Rice LLC (CD&R), a New York-based private equity firm, recently announced an agreement to buy Epicor on 31st August 2020.

The seller is private equity firm KKR & Co. in New York, which acquired Epicor in 2016. The sale price was not disclosed at that time, but Epicor was reportedly valued at $3.3 billion. Epicor customers have high retention rates at 108%, which is how they justified the price.

 

“For Epicor, CD&R may be a very good fit, they tend to work with a company to build it, which is what Epicor needs.”

The Epicor sale to CD&R was announced late last month and will be concluded later this year however could be completed earlier.

What does this mean for Epicor?

Steve Murphy – CEO of Epicor Software recently spoke openly on an interview regarding the recent acquisition saying that the sale to CD&R made a lot of sense. As the two businesses have a lot in common, CD&R already had a ready made understanding of the business and how Epicor operates.

This is because the two have a similar portfolio of customers. Many Epicor customers may be a company which they’ve invested in so there is a lot of commonality between the two.

One thing mentioned was that Epicor could modernise many companies that CD&R invest in. Does this mean that we may see some of CD&Rs businesses being brought onto Epicor as part of the deal? Potentially migrating away from older, ineffective ERP systems onto ERP10?

Another factor which was also aligned was their outlook on cloud. It was mentioned that investment in Cloud Software products is what both companies see moving forward. Epicor have seen a 60% rise in Cloud  business YoY for last 3 years.

The only sure way to tell what is on the horizon with Epicor will be to see how the coming weeks and months unfold! If one thing is for sure, I’m positive it will be that the market will be watching!

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