The inside story of SSS’ path to acquisition

When faced with a crossroads, Ashton Jones has a history of heading in the right direction – a habit of embracing exploration and cultivating curiosity.

Such inquisitive nature – long viewed as an essential skill for any aspiring executive leader – is best illustrated by two significant decisions he made within the space of 18 years.

The first, when weighing up career options as a recent management and marketing graduate from the Victoria University of Wellington in 2005.

“I had two job offers,” Jones recalled. “One as a customer relationship manager at a local cyber security business and the other as a marketing assistant at Colgate-Palmolive.”

An undecided Jones sought the advice of his father – a business development stalwart in technology – who recommended opting for the locally run company rather than the corporate multi-national.

“His advice really resonated, ‘if you don’t know what you want to do, join a small company because you will get to wear a whole bunch of different hats and have a range of experiences’,” Jones said. “Then I could decide what I liked and take it from there.”

Fast forward to 2022 and Jones is now CEO of SSS – IT Security Specialists (SSS), that same Wellington-based cyber security business he first joined almost two decades ago, under the ownership of Bill Tonkin.

His second significant decision came as an intrigued investor keen to understand the emergence of search funds in New Zealand, following an approach from Luke Taylor as founder of Acheron Capital.

“We weren’t looking to sell the business but I’m an investor outside of SSS so I met Luke initially on the grounds of understanding more about search funds in that capacity,” Jones shared. “I do angel investment but had never heard of this concept in the communities that I’m part of so wanted to learn more.”

The rest, a smiling Jones acknowledged, is history following the recent acquisition of SSS by Acheron – “I remember saying to Bill, ‘you have to meet this guy’.”

Early on security, big on culture

Founded in 1985 as Scientific Software and Systems Limited, SSS goes to market as a leading managed security service provider (MSSP) in New Zealand, with deep expertise across public and private sector markets.

In addition to strong identity and access management (IAM) credentials, specialisation spans governance, risk and compliance (GRC) plus security operations and engineering.

The buy-out of SSS represents the first acquisition by a search fund in New Zealand, delivered through an entrepreneur-led private equity fund seeking to acquire a small- to medium-sized business to operate and grow over the long-term.

“We were and still are a New Zealand-owned cyber security company and there isn’t many left in the market,” Jones said. “This is our core focus.”

After initially delivering custom software development for scientists and engineers during the early days of the company, SSS started building security capabilities in the mid-1990s.

In 1996, the business was appointed as the first value-added reseller (VAR) of MIMEsweeper in New Zealand, offering content filtering for email.

Progression continued with the awarding of an agency-to-agency secure email project tender in 2000, working with Kiwi government divisions to implement a standard for secure email, which became known as SEEMail.

“When I first joined SSS, our job was mainly to educate the market,” Jones said. “As cyber threats and business breaches increase every day, it’s become an easier conversation to have in that sense but there’s also a lot more competition.”

By 2010 – and within the space of 10 years – more than 50% of all local government agencies called SSS a client which laid the foundations for a fully-fledged assault on an evolving cyber security market in New Zealand.

“Things started to change when we formed our security consulting business in 2013,” Jones explained. “We secured investment from the owners and recruited some strong senior resources to build out business lines in IAM, security consulting and most recently, screening operations.

“This widened our capabilities across cyber security which is unique in New Zealand. That was a big turning point for our business.”

Fuelling such growth was the acceleration of a long established partnership with Sophos, an alliance which started in 2008.

“Signing up as a Sophos partner early on was critical,” Jones accepted. “When I first started, we had Sophos on our books but were just selling the solution as an add-on to an email security platform.

“But around 2009 we realised the product had legs and expanded our portfolio to include more Sophos solutions which pushed us down the growth path. This was an acceleration point.”

In addition to market-leading technology, SSS also increased focus on recruiting top personnel within the cyber security market, expanding the team from four to 50 during Jones’ tenure. Notably within the commercial team through the addition of four full-time business development managers and two sales assistants.

“Most joined about three years ago and this has helped to rapidly grow our business,” Jones said. “You have to focus on protecting the company culture and being very intentional about that otherwise it becomes easy to lose as you grow.”

For Jones, running a company without middle managers allowed stronger levels of control and ease of communication – “everyone was directly connected to me so the culture was easier to manage”.

As expansion plans kicked into gear and a company structure formed in response however, Jones accepted that creating an additional layer of management could jeopardise culture. But only if it’s allowed to.

“Yes, you become a step removed as a CEO and the communication becomes that little bit more difficult but we’ve always ensured that our leaders exhibit the right values to take the culture forward,” he outlined.

“We were and still are a New Zealand-owned cyber security company and there isn’t many left in the market. This is our core focus”

For example, SSS deploys a “robust recruitment process” to ensure cultural fit during the hiring stages. This includes bringing in employees from across all areas of the business to formally interview candidates with all feedback taken seriously to ensure new additions are aligned.

“I suppose recruiters hate us but our culture is our people,” Jones said. “We’ve made mistakes in the past hiring people who weren’t a good fit and that was a mistake. It’s better to hold out and wait rather than recruit in those scenarios.”

Even when faced with the desperate need to alleviate resource challenges, Jones advocated for pulling other levers to address bandwidth concerns.

“Slow down work, get rid of bad clients or unprofitable service lines,” he advised. “All of those exercises are more attractive than hiring somebody who’s a bad fit for your culture. And you’ll learn the hard way on that one.”

Inside the acquisition

The acquisition of SSS by Acheron in New Zealand follows the growth of search funds into Australasia and the ongoing global expansion from the US market.

Both parties are fully committed to ensuring a “seamless transition” for employees, clients and partners with Jones assuming the position of Consulting Executive and Taylor on-boarded as new CEO.

“I’m thrilled to announce the acquisition of SSS, and the completion of a long period of time working closely with Bill, Ashton and their wider team to bring our vision for the fund to reality here in Aotearoa,” Taylor said. “SSS is a leading company, with an exceptional team of staff and clients in a dynamic and fast-growing industry.”

Led by Taylor, Acheron is also backed by a group of experienced investors and advisors from New Zealand, Australia, USA, Brazil, Spain and South Africa.

The criteria is simple – engage with business owners interested in maintaining their legacy while considering opportunities to transition ownership of the company.

“We bring a combination of entrepreneurial talent coupled with expertise and investment from around the world,” Taylor added. “I’m proud to have proven the search fund model in New Zealand and I’m looking forward to the transition period alongside the team at SSS.”

According to Jones, the acquisition is testament to the search fund’s model of pairing entrepreneurial talent and experienced global investors in the local market.

“In considering any possible sale of SSS, it was crucial that the buyer would be committed to, and capable of, retaining our culture, our people and achieving growth in a way that aligned strongly to our vision and purpose,” he outlined. “We are extremely confident that Acheron, with Luke at the helm, provides that.”

This was a business not immediately looking to sell, rather embark on a three-year plan designed to start the process of value creation by investing in building up products and managed services capabilities.

“After I met with Luke, his story resonated and that’s when I brought Bill into the conversation and we explored a possible sale,” Jones said. “We were both motivated by the concept of preserving and enhancing the value we have all created over many years.”

Jones and Tonkin were encouraged further by Taylor’s background as a former New Zealand Navy Officer and Ship Captain, with more than 20 years of experience leading high performing teams in both the military and corporate world.

Following an initial conversation in May 2022 and subsequent follow-up in November, the acquisition process fully kicked into gear in January 2023.

“It was an intensive due diligence process as you would expect but it was great to work with Luke during this period,” Jones added. “To see him work under pressure and to experience the leadership qualities that he has was a huge benefit.”

With Taylor now CEO following completion of the deal, Jones will work full-time in the business until 30 June 2024 to facilitate the transition process. This also includes uncoupling some shared systems and services from SecuritEase, a spin-off stock broking software provider under the previous ownership.

“My core focus is to help Luke settle into the CEO role and if I’m needed beyond that, I’ll be available,” Jones stated.

“When I shared the news with our senior leadership team in early August, I introduced Luke to all our executives one-on-one and that helped the process. You could see the relief on their faces as they talked with Luke and understood the good intentions that he has for the business and his excitement for what is coming next.”

Two days later, Jones announced the acquisition to the wider team and followed a similar approach of ensuring Taylor was available to mix with staff and articulate his vision for the future.

“Change can be challenging and initial reactions can be bad but that’s why we’ve been transparent from the start, which forms a key part of our culture,” Jones said. “Our employees are excited about the future possibilities for the company and Acheron are buying into this.

“We’ve experienced many years of organic growth but what’s also encouraging is the inorganic growth opportunity emerging with Acheron. Luke and his team of investors have that focus.”