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Strattam Capital Combines MHC Software and Vanguard Systems

This article originally appeared in the Wall Street Journal Pro, September 24, 2019

Strattam Capital Combines MHC Software and Vanguard Systems

By Laura Cooper | Sept. 24, 2019 6:30 pm ET

The combined company will digitize usually manual, paper-based processes and sell software to help control workflow and integrate with enterprise resource planning systems.

Strattam Capital is bringing together two technology companies to create a combined entity that provides systems to digitize content and automate workflows and processes.

The private-equity firm took a majority stake in MHC Software LLC, an enterprise content automation and document management so ware provider; and

combined it with workflow and process-automation business Vanguard Systems Inc., which MHC acquired. The combined company will digitize usually manual, paper-based processes and sell software to help control workflow and integrate with enterprise resource planning systems.

Under the MHC name, the company will serve more than two million users and more than 1,100 customers.

The investments stemmed from an existing relationship Strattam had with the leader of Vanguard, according to Bob Morse, a co-founder and managing partner at Austin, Texas-based Strattam.

Vanguard co-founder and Chief Executive David Engberg was looking to step back from his role and find a good home for his business, said Mr. Morse. The firm and Vanguard entered a period of exclusivity, through which Strattam looked for a prospective company to combine with Vanguard. They found MHC, which also was going through a succession planning process, he said.

As a result of the deal Burnsville, Minn.-based MHC moved that process forward by promoting Gina Armada, the chief operating officer of MHC, to chief executive of the combined business. She replaced MHC co-founder John Shields in the CEO role, while Mr. Shields became chairman of the combined company.

While Aston, Pa.-based Vanguard was closely held, Strattam’s investment in MHC will mark an exit for O2 Investment Partners, a Bloomfield Hills, Mich.-based firm that invested in the company in 2017.

Strattam has built its investing strategy around a “five points” approach. The strategy calls for the firm to agree on five goals with companies before it signs a deal to make them part of its portfolio.

In the case of MHC, Mr. Morse said that these initiatives include supporting Ms. Armada in her new role, successfully integrating Vanguard into MHC and continuing discussions with other companies that could be acquired over time.

Additionally, he said that Strattam aims to help MHC add to its sales and marketing staff and also to help the company update the portions of its operations that are still on-site rather than part of its hosted, cloud-based so ware-as-a-service business.

The deal marks Strattam’s fifth platform investment out of Strattam Capital Investment Fund II LP, which closed in February 2019 at $230 million.

The firm invests in companies with enterprise values of less than $100 million and annual revenue of between $10 million and $30 million, according to its website.

Write to Laura Cooper at laura.cooper@wsj.com

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