Chicago Shop Rolls Out Exits As It Eyes Fund X

Thoma Bravo LLC announced an agreement July 19 to sell Flexera Software, a company that provides software licensing services, in a deal that promises to generate a return of close to 5x, according to Orlando Bravo (pictured), a managing partner at the Chicago-based buyout shop, sister magazine Buyouts has reported.

Flexera is the third exit announced or closed by Thoma Bravo this week, an extraordinarily productive turn of events that should help the firm as it prepares to raise its next buyout fund.

“We think the market is reasonably valued, the debt markets are healthy, and corporate buyers are interested in buying,” Bravo said of the market for selling companies.

The firm carved Flexera out of Macrovision in April 2008, investing around $60 million of equity in a deal valued at $200 million. The new buyer is Teachers’ Private Capital, the private equity arm of the Ontario Teachers’ Pension Plan. The purchase price was not disclosed. The sale would be the second exit from Thoma Bravo Fund IX LP, an $822.5 million fund the firm closed in 2009.

On July 18, the day before the Flexera announcement, Thoma Bravo closed its sale of Manatron, a provider of property tax services for state and local governments. The buyer is Thomson Reuters, publisher of Buyouts, in a deal that was announced in early June. Terms were not disclosed. However, Bravo said the sale would generate a return of more than 3x, and a gross internal rate of return of 50 percent. The firm took the company private for $66 million in April 2008, investing out of Fund IX and Thoma Cressey Equity Partners Fund VIII LP, a $765 million fund closed in 2005, before co-founders Bryan Cressey and Carl Thoma decided to go their separate ways (Cressey now runs Cressey & Co., a firm focused on the health care sector).

Also on July 18, Thoma Bravo announced the sale of Excelligence Learning Corp., a developer of educational products for early childhood and elementary schools, to Sterling Investment Partners for an undisclosed amount. Bravo said the sale would generate a return of 2.5x, and an IRR of 22 percent for the firm, which took the company private in 2006 (when the firm was still known as Thoma Cressey Equity Partners). The firm invested about $50 million of equity out of Fund VIII in the acquisition, which was valued at approximately $125 million.

Thoma Bravo has invested about 85 percent of Fund IX and is expecting to start raising a new fund later this year, a source close to the firm told Buyouts. Executives are still kicking around potential targets, though they are determined to raise more than the $822.5 million raised for Fund IX.

The firm should also score more exits from Fund VIII, which still holds more than half of the 13 investments the firm made with it. Fund IX holds seven current investments.

Thoma Bravo typically invests at least $20 million of equity in companies generating EBITDA of more than $10 million. Sectors of interest include infrastructure software, education, distribution, financial services and consumer goods and services.

Bernard Vaughan is a Senior Editor at Buyouts Magazine. Follow his tweets @BVaughanReuters.