The acquisition was made based on an EBITDA multiple, which was "much higher" than the market average. Mihai Tătăran also takes on a European role, to build the Microsoft technology business of the IPS group.

The buyer of the majority stake in Avaelgo, an IT solutions provider from Timisoara and one of the relevant local partners of the American giant Microsoft, is a private equity fund from Germany, which plans to build a European IT group that will reach a valuation of over 1 billion euros in 5-7 years. This German-based fund, which wishes to remain anonymous for the time being, is therefore behind IPS Solutions, the software group headquartered in Lichtenstein that took over Avaelgo's shares.

"A match-maker from Romania, Vlad Pasca, from Cluj, connected us with another investment fund, another private equity from Germany, which seemed similar, but there were some notable differences, especially in the capital structure, namely a very large own contribution and fewer pension funds or even none at all. So people who are more open to looking at a future bet than looking for quarterly benefits that must be reported to a pension fund and I liked that very much. I can't give too many details, nor can I name private equity. IPS Solutions is a company from the group of companies that they are now building and I am building with them. They want to be anonymous for now, but they are a private equity company that wants to build a platform where they let us, the entrepreneurs in whom they invested, do the business as we want," Mihai Tătăran revealed during the ZF IT Generation show.

He also said that initially the company had talked to another German fund, but it was scared by the war in Ukraine and abandoned the transaction. "We initially had a discussion with another private equity fund in Germany, which advanced to due diligence, the offer was going to come and the war in Ukraine started and those people withdrew their offer. There was a signed letter of intent, the discussion was very advanced and it stopped because of the war. We went about our business. The country risk yes, the country risk perceived by them. They were conservatives, they had pension funds behind them, it's absolutely understandable."

The German fund took over 75% of Avaelgo, at a valuation much higher than the one usually practiced in the industry, said Mihai Tătăran, without providing exact figures.

"We started from an EBITDA multiplier logic - profit before depreciation and taxes, a multiple that was very high. It is a much higher multiplier than a standard service company receives. You may know from the market multiples of 5,6,7 X EBITDA. We are much higher. There is a cash out now, there are some cash out stages in the coming years, depending on some achievements. There are some targets that I have to achieve and there is the package of actions that remains there. An infusion of capital has not yet been needed, but it is ready there. At any time, 1,000,000 euros can be put on the table."

Avaelgo had a turnover of 22 mln. lei in 2022, with a net profit of 2.8 mln. lei, results generated with a team of 33 people, according to data from the Finance. Taking into account all forms of collaboration, Avaelgo has a team of 60 people, Tătăran said.

What else Mihai Tătătan said during the show:

"We will find the synergies between the companies in the group as we want them. I now have two roles, CEO of Avaelgo - it's a very clear mandate and I'm financially motivated to do this, basically part of the acquisition is carried out in the coming years, but I also have the role of leading a business unit at group level, a virtual business unit, which is across borders, throughout Europe - I have to build the business on Microsoft technology and that attracted me first of all, that in the end, with the Avaelgo blueprint of sales and marketing and carrying out projects - with all the methodology, we will be the spearhead to create business for all the companies in the group in Europe, on Microsoft technology."

"This ability to go out on the market with something innovative, outlined, cohesive, with a holistic vision, with the ability to sell and create business where the customer may not even be aware that he has a need, because this is the essence. We sometimes come, probably in 25% of our projects, but these are the representative ones - which take us forward, we come up with proposals to build business where there is not a very clearly outlined need. This is precisely what makes us significant, differentiates us significantly from the competition."

"75% of the company is owned by the investment fund through this company, IPS Solutions. The discussions lasted a year and three months - enormous because the market and the world have changed, we are no longer like in August 2022."

"For me it was very ok from the beginning to give up the majority stake, because I know that this is the construction and it allows me to build by giving me this freedom in which I have the business plan, I do it, they approve it, I have to build further from a minority position indeed, but as CEO and business unit manager at the level of the entire group. So it was a negotiation that from the beginning had these conditions on the table, I would have total freedom to build and they would have a significant majority stake."