NewSpring Completes Successful Exit of Managed IT Services Firm Magna5

NewSpring Completes Successful Exit of Magna5

NewSpring, a family of private equity strategies, has recently concluded a significant transaction involving its managed IT services platform, Magna5. This sale to AEA Investors is seen as a strategic move, highlighting Magna5's transformative journey under NewSpring's stewardship, which has witnessed an impressive growth trajectory both in revenue and workforce.

Expansion and Growth

During NewSpring's investment in Magna5, the company evolved into a leading national provider of managed IT services, cybersecurity, and cloud solutions. This growth is a direct result of NewSpring's strategic focus on enhancing institutional scale within the lower-middle market, supporting Magna5 in navigating a competitive landscape characterized by increasing demand for integrated IT solutions across various industries, particularly in heavily regulated sectors such as finance and healthcare.

The partnership resulted in Magna5 achieving an exceptional 8x revenue increase during NewSpring's investment period, alongside an expansion of its workforce to 265 employees—up nearly sixfold. This significant organizational growth facilitated the company’s broader service reach, enabling it to penetrate new markets in financial services, healthcare, and education, among others.

Strategic Partnerships and Leadership

A crucial element of this success was NewSpring's strategic pairing of Magna5 with industry veteran Bob Farina, who brought invaluable leadership and expertise to the management team. This strategic alignment, combined with a disciplined approach to mergers and acquisitions, allowed Magna5 to integrate nine regional managed services providers, bolstering its service capabilities and enhancing its market position.

According to Jim Ashton, a General Partner at NewSpring, the methodology employed with Magna5 showcases the firm's systematic approach to building scalable platforms in fragmented markets. The focus on pairing expert leadership with a cohesive operational strategy laid the foundation for Magna5's expansive growth and resilience against market fluctuations.

A Continued Journey

Now positioned for further growth, Magna5 enters a new phase under AEA Investors, poised to sustain its momentum. Bob Farina, CEO of Magna5, expressed gratitude for NewSpring’s partnership, emphasizing the critical role it played during a pivotal period in the company’s development. The leadership team is optimistic about collaborating closely with AEA to ensure continued success and innovation.

NewSpring's Role in Growth Strategies

NewSpring’s investment model is centered on fostering close collaborations with founder-led businesses, enabling them to build sustainable scales through refined operational strategies and targeted M&A activities. The firm’s approach is designed to consolidate complementary businesses while unlocking value through comprehensive integration, thus reducing associated risks.

NewSpring has also established a track record of offering operational guidance and investment expertise, leading to the creation of market leaders across various sectors including technology, healthcare, consumer products, and more. With over $3.5 billion in assets under management and more than 250 completed investments, NewSpring's commitment to fostering growth in the lower-middle market continues to support industry advancement.

Conclusion

The exit of Magna5 underscores NewSpring’s effectiveness in nurturing businesses through significant growth phases, positioning them well for future successes. As AEA Investors takes the helm, all eyes will be on how Magna5 continues to innovate and adapt within the rapidly evolving landscape of managed IT services. The accomplished journey of Magna5 from a NewSpring portfolio company to a robust player in the IT services sector serves as a testament to the power of strategic partnerships and disciplined operational execution in driving substantial growth.