A platform for success: The carve-out and growth of DWS

De-mergers can be emotive and delicate, however bringing on board a supportive and experienced private equity firm can enable phenomenal results – as Inflexion portfolio company DWS illustrates.

It’s no surprise that investors were interested in supporting the carve-out of Digital Wholesale Solutions (DWS). The UK IT, communications and cloud wholesale platform firm’s SMB technology sector is worth more than £10bn annually, growing at 4-5% per annum, with DWS rapidly winning market share. The company’s carve-out was announced in March 2021 supported by a minority capital investment from Inflexion Partnership Capital as a strategic partnership alongside shareholders of former parent Daisy Group.

The chemistry that led to the partnership started years prior. Daisy’s founder Matthew (Matt) Riley was well known to Inflexion’s Partners David Whileman and Edward Lynch and had been exploring ways of working together owing to the potential Inflexion saw in the business. Ultimately spinning off the valuable DWS division not only helped Daisy to de-gear, but set DWS up for enhanced future success. The minority capital solution meant Matt could remain part of that successful journey and support the final transition, so an agreement was swiftly reached.

DWS had grown within Daisy over 10 years, with management operationally separating the business two years before the legal demerger. “We spent that time reducing and then removing much of the reliance that we had on Daisy and ensuring we had a clear view of the interdependencies that we needed to maintain between us,” explains Nathan Marke, Chief Operating Officer at DWS.

Discussions took place in 2020 and lockdown actually proved helpful owing to the efficiency of remote meetings. “Inflexion stood out in a competitive process as the most interested in our business and with the experience and willingness to invest in a business fresh from a demerger,” Nathan recalls.

Racing ahead on home turf

Fireworks followed DWS’s spin-off: The company’s first set of results since its demerger saw its revenues and adjusted EBITDA grow organically by 14% in the year to 31 March 2022, with all of its key product lines achieving double digit revenue growth. Not too shabby for the firm’s first year of independence. The leadership team puts it down to myriad factors, including the success that DWS’s customers, expert technology resellers in the UK, are having in winning over SMBs, and payback from long-term investment in the firm’s technology platform, which the firm says makes DWS simple to do business with. The investment and hard work continue to pay off, with DWS reporting a strong first half of the current financial year.

The UK B2B technology market is buoyant, boasting the second highest digital adoption rate globally after the US. “We have no imminent plans to look further afield geographically, with the switch from copper to fibre and the move to cloud both catalysing a huge shift we can capitalise on in the UK,” Nathan says, adding that Europe, less developed in this evolution, could be an opportunity for the firm in the future.

Looking ahead, it’s more of the same for 2023. “We see tremendous scope for continued organic growth in the market. We are looking to scale our cloud category with a particular focus on public cloud and security and want to keep adding specialist technical skills to our team to enable our partners to succeed. We continue to invest to make our online platform stand out from the crowd. And most importantly, we want our already strong NPS (Net Promoter Score) to continue to improve because looking after our partners comes before everything else. Of course, we are always looking for strategic M&A opportunities and have facilities in place to execute, though nothing is imminent.”

Inflexion hold a significant minority stake in DWS – with Nathan suggesting their input is more significant than minor. “I’ve worked with PE-backed firms before and Inflexion don’t behave like a minority investor. They’re very interested and engaged in what we do. We feel we have the best of both worlds – a diverse group of shareholders providing expertise and all working toward a common aim. I think Inflexion get the balance right.”

From carve-out to build-out


There is more value in the relationship with Inflexion that just fiscal investment. The team has provided many value adds including:


Talent appraisal: “Inflexion appointed an experienced consultancy to get to know our whole exec team so we could identify our strengths and also where we had gaps,” Nathan recalls. Shortly after the ink dried on the deal, DWS brought in a very experienced CFO in Andy Boland. Additionally, Paul McCabe was brought in as Chief Digital Officer to own DWS’s platform strategy and seasoned executive Paul Walker came on from Inflexion’s network as NED.


Tech matters: DWS is clearly handy in technology owing to its core business focus, but Inflexion were able to provide a “very useful lens” onto DWS’s platform architecture and security – crucial when the business relies on an online platform – and has supported the creation of a data team since the carve-out. Inflexion were also instrumental in road-mapping technical debt removal from the platform. Says Nathan, “We now have a clear roadmap to make our platform stand out in our market, a critical differentiator for our offering which will help the business support growth and improve the partner experience.”