Blackstone, Thoma Bravo and Vista led flurry of enterprise software deals in Q1; Merck to buy Prometheus

Apollo opens new London office.

Happy Monday, Hubsters. MK Flynn here with the Wire.

Today, we’re taking a Deep Dive into enterprise software, which saw a slew of deal announcements in Q1. To find out what’s driving deals in the sector, PE Hub’s Obey Martin Manayiti spoke with many sources, including dealmakers at Thoma Bravo and Vista Equity Partners and with investment bankers at William Blair.

We’ve also got an update on PE folks who left Credit Suisse and a look at the wave of PE firms opening up new offices in London to strengthen their presence in Europe.

But first, let’s look at some pharmaceutical deal news that broke over the weekend.

Sustainable innovation
On Sunday, Merck said it will buy Prometheus Biosciences for $10.8 billion.
Prometheus develops products for the treatment of immune-mediated diseases, including ulcerative colitis and Crohn’s disease.

The acquisition “will accelerate our growing presence in immunology where there remains substantial unmet patient need,” said Robert Davis, chairman and CEO of Merck. “This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable innovation engine that will drive our growth well into the next decade.”

More deals from Merck are expected. The company recently agreed to buy Imago BioSciences, which develops treatments for blood cancer, for $1.35 billion.

Activity has been picking up for pharma deals. Amgen agreed in December to buy Horizon Therapeutics for $27.8 billion. And earlier this year, Pfizer agreed to buy Seagen for $43 billion.

“Private equity will always love software”
While overall M&A slowed in the first quarter of the year, it sped up in the enterprise software sector:

In February, Thoma Bravoclosed its take-private deal of Coupa Software for $8 billion.
In March, when the collapse of Silicon Valley Bank dominated headlines, Silver Lake and Canada Pension Plan Investment Board announced they will buy customer experience management software developer Qualtrics for $12.5 billion.

Also in March, Blackstonesaid it would buy events tech provider Cvent from Vista Equity Partners, for $4.6 billion.

The same month, Vista completed its take-private buyout of Duck Creek, a developer of software for the insurance industry, for $2.6 billion.

And the deal announcements have continued in April, with Cinven agreeing to acquire Archer, a provider of integrated risk management software, from Clearlake Capital Group and Symphony Technology Group.

“Private equity will always love software,” Pete Dalrymple, managing director and co-head of technology investment banking at William Blair, told Obey. “Maybe the valuations are different, but the fundamentals are not. Software is embedded in our daily lives and is ubiquitous across numerous industries and use cases. In good markets and bad, investors appreciate the recurring and predictable nature of these businesses, their capital efficiency, and the additional M&A opportunities that oftentimes come along with owning a platform of scale.”

Said Monti Saroya, senior managing director and co-head of flagship fund at Vista Equity Partners:

“Software is projected to remain the fastest growing sector of the global economy for the foreseeable future, with recent advances in areas such as cloud computing and AI still in their early stages of demonstrating what could amount to the creation of exponential value for organizations and investors. This rare mix of resiliency and long-term relevance can result in meaningful opportunities to drive consistent, risk-adjusted returns.”

For more insights, read Obey’s feature.

People moves
Michael Murphy, the former co-head of Credit Suisse’s private capital advisory group who left recently, will lead investor relations in a newly created role with London mid-market shop CapVest, sources told Buyouts’ Chris Witkowsky.

Murphy is among a slew of executives who left Credit Suisse in the wake of the bank’s emergency acquisition by UBS for more than $3 billion. UBS now is in the process of figuring out an integration plan for Credit Suisse executives and operations.

Murphy’s head of IR role is a new one at CapVest, which was formed in 1999. The firm closed its fourth flagship pool on more than €1 billion in 2019, and was raising its fifth fund as of 2021, according to PEI data.

Murphy joined Credit Suisse in 2000 when the bank merged with Donaldson, Lufkin & Jenrette, where he worked as an associate in DLJ’s private fund group. He co-led the group at Credit Suisse alongside David Klein.

Klein remains sole head of the group, which has been one of the biggest and busiest placement shops in the industry. PFG raised 441 funds with $636 billion in capital since inception in 1994, PEI reported earlier this year.

CapVest focuses investments primarily in three key sectors: staple consumer goods; healthcare; and essential services, according to its Form ADV. It looks for buy-and-build opportunities in fragmented markets where there is an opportunity for consolidation and international expansion.

Recent deals include the acquisition of Second Nature Brands last year from Palladium Equity, a platform investment onto which the firm added-on Brownie Brittle in December. Also last year, the firm acquired Natra, a European producer and distributor of chocolates and cocoa products, from Investindustrial.

The firm also exited Valeo Foods to Bain Capital and sold Eight Fifty Food Group to Sofina Foods, a Canadian multi-protein producer, both in 2021. CapVest has acquired more than 80 companies over the last 20 years.

London calling
Apollo Global Management has announced the opening of a new office in London to strengthen its presence in Europe, as PE Hub Europe’s Irien Joseph reports.

Apollo will combine its teams from offices at 10 Portman Square and 25 St George Street into a new location at 1 Soho Place. Apollo’s new office will serve as an expanded regional hub for Apollo’s European team, in line with the firm’s broader global growth strategy, according to a release.

The move follows the firm’s other recent new or renovated workplaces in Singapore, New York, Greenwich, Mumbai, and Hong Kong, the release added.

For more on private equity firms expanding in London, check out Nina Lindholm’s recent listicle.

Speaking of the PE Hub Europe team, editor Craig McGlashan will write tomorrow’s Wire.
On Wednesday, Buyouts’ Chris Witkowsky will write the Wire as usual.

Investor relations
Also on Wednesday, I’ll be conducting a Fireside Keynote Chat with Arielle Gross Samuels, managing director, global head of marketing for Blackstone, at PEI Group’s 18th annual Investor Relations, Marketing & Communications New York Forum. (Note: PEI is the owner of PE Hub.)

Before joining Blackstone, Samuels worked at Meta (Facebook), serving as the global head of ESG business and previously business lead of global business marketing. Prior to Meta, Samuels worked at Deloitte in engineering consulting.

I’m looking forward to hearing her thoughts on the new Build with Blackstone campaign – and how it exemplifies “future-proof marketing.”