Ergo inks deal worth more than €10m for software developer BoatyardX

Ergo, the largest privately owned Irish IT services company, has agreed to acquire Irish software development business BoatyardX in a deal said to be worth in excess of €10 million.

The transaction, Ergo’s fifth since 2010, will add 120 IT professionals to Ergo’s global team, bringing its overall employee number to 700 after the Dublin-anchored company acquired Limerick-based Asystec earlier this year in a deal worth more than €25 million.

Financial details of the acquisition have not been disclosed. However, market sources have indicated that Ergo — which provides a wide range of IT services to its customers, from cloud and managed services to software and infrastructure — has agreed to pay more than €10 million for BoatyardX, which will retain its senior management team.

Founded in 2019 as part of former Mastercard executive Garry Lyons’ Shipyard Technology Ventures, BoatyardX builds native cloud applications for its more than 20 clients, mostly start-ups and large enterprises, in Europe, north and south America as well as Africa and southeast Asia.

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The company, which almost tripled its annual turnover from €1.6 million in 2020 to €4.4 million in 2021, according to recently filed accounts, is headquartered in Dublin but has teams in both Romania and Colombia working with customers across the fintech, payments and ecommerce industries.

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In a statement, BoatyardX managing director Brian Barter said the deal will accelerate the company’s “rapid growth”. He said: “BoatyardX’s international experience and strength in custom cloud-based product development will build on, and enhance Ergo’s extensive digital, cloud and customer technology capabilities.”

Ergo chief executive Paul McCann told The Irish Times that BoatyardX was a perfect fit for the company as it looks to grow its digital transformation business.

“Boatyard’s speciality, where they do a lot of work is they help clients interact with their users. So it’s very much [focused on the] client, customer interface, like apps and web interaction with customers and very much on the revenue-generating side of things for their customers. So there’s a specific set of skills around that, an expertise that Boatyard has.”

Ergo, founded by John Purdy and Tim Sheehy in 1993 as a two-man firm selling toner cartridges for printers, has ramped up acquisitions as the pace of consolidation within the domestic IT services market has accelerated in recent years. Mr McCann, who was serving as chairman of Ergo, swapped positions at the company with Mr Purdy last year and has been tasked with leading Ergo’s growth-through-acquisition strategy.

Asked whether that rapid pace is expected to slacken amid a slowdown in the broader global tech sector, Mr McCann — a former managing partner at Grant Thornton — said the Irish market remains a “hot space and probably will be for a while”.

He said despite gloomy economic sentiment, there is “inherent demand” for IT services as businesses battle to keep up with technological shifts and developments.

“What I’m expecting to see in the next year is clients being more cautious in terms of making sure they’re going to invest value, pausing a little bit more,” Mr McCann said. “I’m expecting, though, activity to remain good because all of these companies, all of our clients and the market in general has to continue to have the right technology, continue to develop their IT strategy, and continue to have a digital transformation strategy.”

In a statement, Ergo — which generated an annual turnover of €87 million in 2021 — said it remains on track to meet €250 million revenue target over the next three years.