Best/biggest PE firms that focus on software?
What are the best PE firms that focus on software? And do you guys view this sector to be a promising one for PE in the next decade since software is since an important part of our economy?
Trending Content
Career Resources
Thoma Bravo, Vista, Francisco Partners, Hg... there are a seemingly endless number of software firms now.
Yes, it is not just a good sector, but by many accounts, the sector.
Thanks for the information. Because it's a popular sector, have you noticed that it's more competitive to get into these software-based firms?
It depends. It's very difficult to get a job at Vista or Thoma as it is Apollo or Bain LBO. But the feeders are different. For a place like Vista, you either need to show supreme interest in the B2B SaaS sector, or have experience in a strong TMT group (e.g., they won't just let in anyone with no serious interest or experience). Whereas with Apollo or Bain, I've seen people come from different backgrounds (from generalist consulting to energy IB to generalist IB... etc.). Does that make sense?
Absolutely. Thanks. Yes, I'm trying to get into a group in SF that does software IB, and was hoping that would give me a leg up on a software PE position -- sounds like it would.
Regarding a broader question, do you think that if I delay PE recruiting until my second year (to give myself a chance to see if I like IB/my group), that will still give me a strong chance at PE (if I'm in a software IB group)? Or, based on your experience, do you think chances at PE diminish if you don't recruit on-cycle right after you start as a first year analyst? Thanks for the info.
Sorry going to have to invalidate this. Vista and Thoma generally don’t care what banking group you came from. Know 2 people at Vista and 1 at Thoma with the following backgrounds: leveraged finance, industrials coverage, and M&A.
Despite what this site might make you believe, group doesn’t actually matter all that much as long as you’ve got the stuff and are proactive networking.
This is true. While it is difficult to get a job at any of these firms, getting a job at Vista/TB/FP etc while it may not be technically/experientially harder to get in, it is more important to craft your story better with these firms for getting a seat. As someone who did get a seat at a traditional MF, I did have two friends who were in tech banking (one in MM and one in BB) who recruited for the Vista/TB/FP class of funds and they definitely could attest to the need to articulate and demonstrate a desire to work in the tech space - much more than could be asked for interviewing for a generic MF role. I am not saying one is easier than the other at all. But it is important to recognize that there is an additional element while recruiting for a sector-focused fund such as those we've discussed in this thread
H&F is also a top name in the space
Capital is pouring into the sector chasing returns of the last decade. Public software companies - unless they suck - are routinely valued at 20-30x sales, if not more. That's as clear a signal as any to entrepreneurs that they should create more software assets and excess returns are likely to be competed away.
Past performance not indicative of future results.
bump
Would add Silver Lake, Marlin Equity, Clearlake, New Mountain Capital, and Golden Gate as a few other large names that invest in the space. The latter three are technically generalist funds but have historically invested in software deals frequently. To the earlier comments, most funds care first and foremost about hiring smart, motivated, normal people. IB group is secondary, though it certainly doesn't hurt to be in a good TMT group if your ultimate goal is to end up in software PE.
Edit: Bain Capital Ventures is another high-profile name that plays in the space but they tend to focus more on venture / growth deals vs. traditional later-stage buyouts like the names mentioned above.
Was surprised Silver Lake didn’t come up immediately - they just closed a $20B dedicated to tech, largest in history
Thoma Bravo, Vista, H&F, Permira, Insight, Hg and couple more listed in here. As others have mentioned, everyone is pouring into software now but those (and many more) have a very successful track record in the space.
Most of the software-focused heavy hitters have already been mentioned but returns/prevalence of opportunities in the software sector have been so high over the last decade (and it's only accelerating) that pretty much every big generalist firm is building out a dedicated tech team. Also a long tail of new funds being formed to go after these deals. If you can get a job at a Vista/Thoma/Insight, that's obviously great but there are also a lot of new $500M-1B software-focused funds out there that might be easier for folks to get a first gig at if they don't have the shiniest resume. Obviously more risk with those firms but if you're bullish on software, then you should believe that most of those firms will eat too.
To piggyback, one consideration, generalist funds are sometimes "sticker shocked" by the buy-in multiples required in software deals (e.g., versus business services deals), so tech teams embedded in generalist firms can have harder times competing on growthier deals and/or more frustration at deploying capital (due to lack of IC support). Not a deal breaker but something to weigh if not joining a pureplay software shop.
This...also add extremely fast processes (e.g., 2 week DD to singing), extremely adjusted EBITDA/run-rate adjustments (e.g. future price increases/cost cut realizations), as well as aggressive add on multiples (makes it difficult for smaller shops to find decent sized platforms)
Software Ranking 2021
This seems good. Would add Permira seems to be on the up in terms of trend
Tech =/= Software
Thoma and Vista are #1 for being the most active and best returns - Vista is definitely not trending downwards, have you not seen their recent exits/acquisitions?
Vista losing deals to Thoma left and right post tax fraud issues. LPs don’t want to be tied up in that noise.
https://www.thomabravo.com/team
How come the female associates look like they could model
Probably gotta make up for their appalling male/female ratio
On the MM side, I'd add in LLR, they're a very solid shop as far as I can tell, and they've got some smart people there for sure.
Not sure if people here are discussing buyout or growth, but LLR does growth
As someone mentioned already, Clearlake’s been big in the space recently. On the more legacy/lower growth side, you see CD&R, KKR, Bain, GGC
CD&R made a splash with what (I think) was their first software acquisition this past November... Something like $5bn for Epicor I believe
Surprised no one has mentioned them yet, but Accel-KKR.
Follow
Follow
In autem omnis tenetur quia voluptatum. Deserunt soluta excepturi accusantium quo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Dolorem minima eum et. At quas non dolor. Dolores quo similique aut reprehenderit eos nihil molestias. Rerum assumenda sit molestias nulla. Quisquam minima qui commodi est voluptatem dolores. Sunt sunt cupiditate ut aspernatur ipsam odit.