Francisco Partners has agreed to make a majority investment in Native Instruments, a Berlin-based digital music creation software and hardware business. EMH Partners and other founding members of the company will retain a minority stake. Francisco Partners was advised by Raymond James and Freshfields Bruckhaus Deringer. Native Instruments and its shareholders were advised by GCA Altium and Milbank.
Munich, Berlin (Germany), 20th January 2021: EMH Partners, and the Founding Shareholders of Native Instruments, announced today the signing of a definitive agreement to sell a majority of their shares in Native Instruments Holding GmbH, the Berlin-based global leader in digital music creation software and hardware, to Francisco Partners, a leading global investment firm that specializes in partnering with technology businesses. As part of the transaction EMH Partners, members of the Native Instruments founding team, and key Native Instruments’ employees will retain a significant minority stake in the company.
Native Instruments was founded in 1996 in Berlin and employs more than 400 employees worldwide. It operates 7 global offices and is active in more than 180 countries. Native Instruments is regarded as one of the spearheads of the democratisation of music production, as it enables creatives to produce their music without the large set-up costs associated with traditional music studios. Music professionals all around the globe have been relying on the company’s comprehensive music instrument library and high-quality software tools to support their music creation process, with an estimated 8 out of 10 tracks in the Billboard top 10 using Native Instruments technology.
In 2017, EMH Partners invested 50 million Euros in Native Instruments, followed by a further investment in 2020 to achieve majority ownership in the company. The management and board of Native Instruments, together with EMH, have developed the company significantly and expanded its position in the industry:
- Revenues in Native Instruments’ music creation tools increased by 60% since EMH’s investment in 2017;
- Monthly active users more than doubled to 1.5 million by the end of 2020;
- Industry partners on Native Instruments’ technology platforms increased by 60%, cementing the company’s global technology leadership.
With Francisco Partners, Native Instruments is planning to further enhance its product leadership, drive consolidation in the growing and fragmented market for digital music creation and extend its already leading position in the industry.
“As an innovator in digital music creation, with a supreme brand recognition and outstanding software technology, Native Instruments is a perfect platform and partner for Francisco Partners. We look forward to working together with the management team and the existing shareholder group, utilising our broad operational and strategic experience and M&A capabilities to help the company accelerate its growth trajectory,” said Matt Spetzler, Co-Head Europe and Partner at Francisco Partners. Spetzler will join the Native Instruments board of directors. “We are very excited to join forces with the Native Instruments team and the existing shareholders, and firmly believe they are the platform to back in the exciting space of music creation,” added Mario Razzini, Principal at Francisco Partners, who will also join the board.
Dominik Schwarz, Partner at EMH Partners says: “Our partnership with Native Instruments underlines our strength as a leading partner for technology entrepreneurs in German-speaking Europe. We invest in technology-driven mid-sized companies and support these companies with capital, digitalization know-how, and international access. Over the last weeks Francisco Partners has recognized Native Instruments’ excellent international position, strong leadership team and significant future potential. Due to their deep expertise in developing technology companies on a global scale we welcome Francisco Partners and look forward to continuing our partnership with Native Instruments.”
“With their entrepreneurial DNA, EMH were exceptional partners to support the company and its management over the past years in a time of transition and strong growth as a result. I look forward to their continued involvement with Native Instruments,” said Daniel Haver, Co-Founder, former CEO, and Chairman of the Supervisory Board of Native Instruments. “I would like to thank all employees for their incredible achievements as well as Constantin and Robert for their great contributions over the years and their strong leadership in their new roles as CEO and CPO of Native Instruments.”
Constantin Koehncke, CEO of Native Instruments, concluded: “There’s never been a more exciting time in music, with more creators producing more high-quality music all around the world. We’re thrilled to team up with Francisco Partners to enter the next phase of our journey, combining their global resources and expertise with our passionate team, deep relationships within music and proven track record of technical innovation. Together we can realize our mission to empower and inspire the global community of music creators and help them unlock their creative potential through more seamless experiences. Thanks to the support of EMH Partners over the past years we were able to further reinforce and expand our position as the leading digital music creation company, and we now look forward to working with Francisco Partners, EMH Partners and the founding shareholders to continue on this amazing journey.“
While terms of the transaction were not disclosed, the purchase price reflects the significant value generation during EMH Partners’ ownership.
The transaction is expected to close in the first quarter of 2021, subject to customary closing conditions and regulatory review.
Native Instruments and its shareholders were advised by GCA Altium and Milbank. Francisco Partners was advised by Raymond James and Freshfields Bruckhaus Deringer.
About Native Instruments
Native Instruments is the leading manufacturer of software and complementary hardware for computer-based music production and DJing. The company’s mission is to develop innovative, fully integrated solutions for all professions, styles and genres empowering all music creators. The resulting products regularly push technological boundaries and open up new creative horizons for professionals and amateurs alike. Native Instruments opened up the fascinating world of real-time sound synthesis on standard computers in 1996, and today offers an extensive product range for musicians, producers and DJs. From its seven offices in Berlin, Los Angeles, Tokyo, London, Toronto, Paris, and Shenzhen, the Company is active in over 180 countries. For more information on Native Instruments, please visit native-instruments.com.
About Francisco Partners
Francisco Partners is a leading global investment firm that specializes in partnering with technology and technology-enabled businesses. Since its launch over 20 years ago, Francisco Partners has raised over $24 billion in committed capital and invested in more than 300 technology companies, making it one of the most active and longstanding investors in the technology industry. The firm invests in opportunities where its deep sectoral knowledge and operational expertise can help companies realize their full potential. For more information on Francisco Partners, please visit www.franciscopartners.com.
About EMH Partners
EMH Partners is an owner-led investment firm by entrepreneurs for entrepreneurs. As a next-generation private equity company and one of the leading investors in the DACH region, EMH Partners supports the growth of Mittelstand companies with capital, digitalization and expansion expertise. EMH Partners invests in market-leading, owner-managed companies to accompany them in partnership during the next growth phase. Today, EMH Partners manages more than €1 billion of committed capital. For more information on EMH Partners, please visit www.emh.com.