Why We Decided to Continue Our Investment in Sequotech
Marc Erni Shares Insights into Our Second Continuation Vehicle
Marc Erni
Partner Direct Investments
With the recent closing of our second Continuation Vehicle, we are continuing this growth story alongside our investors. What may appear to be a natural next step is, in reality, the result of a clear strategic conviction and a highly demanding process.
We spoke with Marc Erni, our Partner and Head of Direct Investments, about the decision to continue supporting Sequotech, the key success factors behind the CV process, and the role Continuation Vehicles are expected to play in an evolving market environment.
Q: What does the successful closing of this Continuation Vehicle mean for Verium?
Q: What distinguishes this second Continuation Vehicle from the first one?
Marc Erni: The completion of this transaction represents a significant milestone for Verium. Since our investment in 2020, Sequotech has grown from a small, local niche IT services provider into a diversified and successful business group operating across Switzerland and Germany. The transaction reinforces our strategy of supporting companies over the long term while simultaneously giving investors the opportunity to realise part of the value created to date. At the same time, we are strengthening the investor base for the next phase of Sequotech’s buy-and-build growth strategy. The vast majority of investors, the entire management team, and the Verium team have reinvested alongside Sagard, demonstrating their conviction in Sequotech’s future growth potential.
Marc Erni: The second Continuation Vehicle is structured as a single-asset continuation fund, meaning that only one company has been transferred into the new fund. By contrast, the first Verium Continuation Fund included two portfolio companies, Toradex and Mobil in Time. Through the sale of Mobil in Time and the refinancing of Toradex, we were able to return a substantial portion of invested capital to investors after only around 2.5 years. At the same time, Toradex remains an exceptionally successful company within the fund.
Q: What does the successful closing of this Continuation Vehicle mean for Verium?
Marc Erni: The completion of this transaction represents a significant milestone for Verium. Since our investment in 2020, Sequotech has grown from a small, local niche IT services provider into a diversified and successful business group operating across Switzerland and Germany. The transaction reinforces our strategy of supporting companies over the long term while simultaneously giving investors the opportunity to realise part of the value created to date. At the same time, we are strengthening the investor base for the next phase of Sequotech’s buy-and-build growth strategy. The vast majority of investors, the entire management team, and the Verium team have reinvested alongside Sagard, demonstrating their conviction in Sequotech’s future growth potential.
Q: What distinguishes this second Continuation Vehicle from the first one?
Marc Erni: The second Continuation Vehicle is structured as a single-asset continuation fund, meaning that only one company has been transferred into the new fund. By contrast, the first Verium Continuation Fund included two portfolio companies, Toradex and Mobil in Time. Through the sale of Mobil in Time and the refinancing of Toradex, we were able to return a substantial portion of invested capital to investors after only around 2.5 years. At the same time, Toradex remains an exceptionally successful company within the fund.
Q: Which factors were decisive in continuing the investment rather than selling the company?
Marc Erni: The key factors were the strong visibility on future growth, particularly driven by a tangible add-on acquisition pipeline, and the fact that significant value creation opportunities through integration, scaling, and cross-selling have not yet been fully realised. At the same time, the business offers a highly attractive risk-return profile due to its high share of recurring revenues. With the strengthening of the management team and continued investment in multiple growth initiatives, we see substantial potential for further expansion.
Q: How does a CV process typically work, and what are the biggest challenges?
Q: Where do you currently see the most attractive opportunities in the direct investments space?
Marc Erni: The greatest challenge was identifying the right lead investor. With Sagard, we found a partner with whom we had already worked very successfully on Dovida. It was important for us to find an investor with an entrepreneurial mindset, a strong understanding of Swiss business culture, and the financial strength to support Sequotech’s continued inorganic growth strategy. In today’s challenging DACH market environment, competition for GP-led Continuation Vehicles is intense. This made Sequotech’s strong performance all the more important in enabling a successful transaction. As most investors chose to reinvest and had already realised an attractive return through the sale into the Continuation Vehicle, one of the typically more challenging aspects of such transactions was considerably less of an issue. The Continuation Fund allows existing investors to realise part of their gains while remaining invested and continuing to participate in Sequotech’s future value creation potential.
Marc Erni: From our perspective, particularly attractive opportunities can be found in fragmented markets with clear consolidation potential, as well as business models characterised by recurring revenues and structural growth. This includes areas such as IT services, particularly cloud, cybersecurity, and data analytics. At the same time, the rise of artificial intelligence has significantly increased disruption risks. As a result, we are increasingly focusing on sectors that are either less exposed to these developments or directly benefit from them. For example, we recently invested in TW1, a property services group whose business model demonstrates strong resilience to technological disruption. At Toradex, on the other hand, we are invested in a technology company that stands to benefit directly from the growing adoption of AI.
Q: How does a CV process typically work, and what are the biggest challenges?
Marc Erni: The greatest challenge was identifying the right lead investor. With Sagard, we found a partner with whom we had already worked very successfully on Dovida. It was important for us to find an investor with an entrepreneurial mindset, a strong understanding of Swiss business culture, and the financial strength to support Sequotech’s continued inorganic growth strategy. In today’s challenging DACH market environment, competition for GP-led Continuation Vehicles is intense. This made Sequotech’s strong performance all the more important in enabling a successful transaction. As most investors chose to reinvest and had already realised an attractive return through the sale into the Continuation Vehicle, one of the typically more challenging aspects of such transactions was considerably less of an issue. The Continuation Fund allows existing investors to realise part of their gains while remaining invested and continuing to participate in Sequotech’s future value creation potential.
Q: Where do you currently see the most attractive opportunities in the direct investments space?
Marc Erni: From our perspective, particularly attractive opportunities can be found in fragmented markets with clear consolidation potential, as well as business models characterised by recurring revenues and structural growth. This includes areas such as IT services, particularly cloud, cybersecurity, and data analytics. At the same time, the rise of artificial intelligence has significantly increased disruption risks. As a result, we are increasingly focusing on sectors that are either less exposed to these developments or directly benefit from them. For example, we recently invested in TW1, a property services group whose business model demonstrates strong resilience to technological disruption. At Toradex, on the other hand, we are invested in a technology company that stands to benefit directly from the growing adoption of AI.
Continuation Vehicles have become an increasingly important instrument for supporting successful investments over longer periods and fully capturing their value creation potential. For Verium, the launch of its second Continuation Vehicle is not only another milestone but also a clear reflection of our investment philosophy: thinking entrepreneurially, creating value through active ownership, and building lasting success over the long term.
The next chapter of Sequotech is just beginning, and we are excited to write it together with our partners and investors.
Marc Erni
Partner Direct Investments
Further questions for Marc Erni
Q: What were the key success factors behind this transaction?
Marc Erni: The main success factors were Sequotech’s strong operational track record, the high level of reinvestment commitment from all relevant stakeholders, and a clearly defined and validated growth strategy supported by a concrete M&A roadmap. In addition, we completed several acquisitions during the process, which positively impacted both the scale and profitability of the business.
Q: What role do existing and new investors play in this type of structure?
Marc Erni: Existing investors have the choice to either realise liquidity or remain invested and continue participating in future value creation.New investors provide additional growth capital and support the company’s next stage of development. A key element of success is the alignment of interests among all stakeholders, which is reinforced through meaningful reinvestments. In this context, it is worth noting that the Verium team did not sell any shares. Instead, the entire performance fee was reinvested, and additional equity was acquired beyond that.
Q: What will specifically change for Sequotech as a result of the CV?
Marc Erni: Sequotech will gain access to additional capital for further growth, particularly to finance a clearly defined acquisition strategy. At the same time, the existing strategy will be continued and the platform will be scaled in a targeted manner.
Q: This is already your second CV. How has the importance of such structures evolved?
Marc Erni: Over recent years, Continuation Vehicles have become increasingly important and have established themselves as a valuable tool for holding high-quality assets for longer and unlocking their full value creation potential.
Q: What originally attracted you to direct investments, and what keeps you motivated today?
Marc Erni: What appeals to me most is the opportunity to think and act entrepreneurially while contributing directly to the development of businesses. The most rewarding aspect is working alongside management teams to create sustainable success through active value creation.