Apax to make over four times its money on ECI Software stake sale

The deal, announced Thursday, values the ERP software provider company north of $2.5bn, according to people familiar with the matter.

Apax Partners is set to make more than 4x its investment on its partial sale of ECI Software Solutions to Leonard Green & Partners, a source familiar with the transaction told PE Hub.

The deal, announced Thursday, values the ERP software provider company north of $2.5 billion, according to people familiar with the matter.

As part of the transaction, Apax, which owned about 75 percent of the company prior to the stake sale, will retain a minority position in the company. Carlyle Group, previously a minority investor in ECI, will exit its investment in full.

Bank of America acted as lead financial advisor to Apax and ECI alongside Barclays.

PE Hub in January first reported that Apax Partners was exploring selling a stake in ECI after receiving inbound interest.

At that time, sources said the company generated $111 million in 2019 EBITDA. Taking this 2019 figure into account, the $2.5 billion-plus deal value implies a 2019 EBITDA multiple just north of 22x.

It’s unclear how the company performed during covid-19, however, given the hefty valuation assigned to the business, ECI has likely proven its resilience. In January, prior to the pandemic in the North America, sources predicted a deal could value the company at as low as $1.6 billion.

Apax invested in ECI in June 2017, acquiring a majority stake from Level Equity and Carlyle. The latter retained a minority position.

At the time of its original investment, Apax simultaneously combined ECI with Macola, JobBOSS, and MAX – all part of Exact Software, an existing Apax portfolio company. The combination was intended to broaden ECI’s ERP software offerings in the manufacturing vertical.

The company has since grown through several bolt-on acquisitions. In August 2019, ECI acquired Trivest Software, a vertical software provider to the small and medium-size businesses in the manufacturing sector.

In the summer of 2019, ECI acquired Pacsoft, a provider of inventory management and software for hardware retail and trade businesses, and Spruce Computer Systems, a UK-based reseller of ECI’s Spruce software for managing timber.

Throughout the pandemic, ECI continued being acquisitive and added on BOLT Software, ThermoGRID, and Shoptech Industrial Software Corp – all software ERP providers serving job-specific end-markets.

Correction: This report has been updated to correct Apax’ previous stake size and clarify the firm’s return.