Tyneside tech firm TSG completes MBO with multimillion-pound investment

The founders of a Gateshead software firm – including Sage co-founder Sir Graham Wylie – have sold the business in a multimillion-pound management buy-out.

Team Valley based Technology Services Group (TSG), a Microsoft Solution Partner focused on SMEs, has been acquired in an MBO following a significant investment from Pictet Alternative Advisors. The firm’s CEO Rory McKeand and his leadership team have partnered with Pictet to snap up the business from Sir Graham and other shareholders. Executive chairman David Stonehouse and Sir Graham, who co-founded TSG in 2003, will now step away from the company.

The deal marks the next phase of TSG’s expansion, which has seen the company record double-digit growth in both turnover and profits in recent years, while its employee numbers have also soared to more than 250 staff. The group was originally launched in Newcastle, but moved its head office to its Kingsway base in 2021, and it also operates offices in London and Glasgow.

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The business, which turned over £35.3m in most recent accounts has established itself as a leading Microsoft Solution Partner, helping organisations to invest in technologies while also helping clients, who are spread across the UK and operating in various sectors, in their transition to the cloud.

Rory McKeand, CEO of TSG, said: “This transaction is fantastic news for all those associated with TSG. It reflects not only the diligence of our hardworking staff but also the loyalty of our customers and partners who’ve collectively underpinned our success to date. Partnering with Pictet, preserves all employment and will allow us to accelerate organic growth and seek opportunities for future strategic acquisitions.

“We intend to build on the company’s previous successes over the last two decades and we’ll continue to help organisations unlock the value of technology as we strengthen our position as the UK’s leading mid-market business tech partner. Ultimately, it will be our people that will benefit from this landmark deal with the introduction of an Employee Benefit Trust where all employees can become a shareholder in our business.”

Exiting chairman Mr Stonehouse said: “I am delighted that Rory and the team have secured the backing of Pictet to take the business that Graham and I co-founded forward. After some difficult early years and massive changes in the business technology landscape, TSG has become a business that all stakeholders – staff, business partners, clients and shareholders – can be proud to have been a part of.

“We are proud of the growth and success that TSG has achieved, creating a leading Microsoft and cloud focused national IT services provider of outstanding quality with the potential to do even better. We wish Rory, his team, all the team and Pictet all the best for the future.”

Andrzej Sokolowski, head of UK for direct private equity at Pictet, said: “TSG has an attractive and defensible business model, a high proportion of recurring revenue, and customers who value its service quality and technical expertise across the Microsoft tech stack. We see significant potential to increase TSG’s growth organically and via M&A. That includes solution areas in Azure, Dynamics and cybersecurity, as well as accelerating deployment of AI tools.”

Edmund Buckley, head of direct private equity at Pictet, said: “We invest in high quality businesses run by entrepreneurial leaders. We’re pleased to be partnering with Rory McKeand and the TSG management team, and helping the business fulfil its growth ambitions.”

Lincoln International and Ward Hadaway were key advisors for TSG on the deal; Rory McKeand and the management team were advised by Deloitte and Muckle and Pictet’s key advisors were KPMG and Sidley Austin.