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Five Questions with David Humphrey, managing director, Bain Capital Private Equity

As co-head of Bain’s tech, media and telecom unit for North America, give us some color on the $4.7 billion sale of cybersecurity firm Blue Coat to Symantec?

We purchased Blue Coat in early 2015 for $2.4 billion, including debt and equity. We sold it for about twice the price that we paid, but we had the benefit of some leverage on the transaction that made our gains higher than that. This was a successful exit that we’ve very happy with. We’ve had others of that size and larger, either through public markets or straight sales.

As part of the sale, Bain Capital reinvested $750 million into the combined company. What’s the thesis there?

One of the most exciting things about selling Blue Coat to Symantec was the opportunity to roll over a material amount of our proceeds and to continue to participate in the development of that platform under a now bigger umbrella.

In May, Bain teamed with Vista Equity Partners to buy Vertafore, a tech provider for insurance brokers, from TPG. How’d you end up working with Vista on the deal?

Vista Equity is very active investing in the technology sector, as are we. There’s a lot mutual respect between the firms. As it relates to Vertafore, we had previously owned a business called Applied Systems [sold to Hellman & Friedman in 2013 for $1.8 billion], which also competed in the insurance-software sector. We’d bought that from Vista Equity. We each had a thesis that there was an opportunity to invest behind Vertafore and to help grow it, and to benefit from the value creation that we’d seen and each participated in with Applied Systems, if we invested together. That was the genesis around the formation of that particular opportunity. We’d known Vista Equity for a long time. And it was natural to come together in this instance, given our shared history in that specific industry sector within software. It’s 50-50 partnership with Vista.

Bain Capital Private Equity in June announced an investment in Navicure, a cloud-based claims management and patient payment specialist. JMI Equity was a seller on the deal.  So together with the Vertafore deal, you’ve bought two portfolio companies from other private equity firms. Is that a coincidence or are secondary deals a preference for your team?

We prefer making investments in businesses that we feel are well-positioned competitively and where we have a distinct thesis or edge we can bring to help the company achieve its full potential. That cuts across primary, secondary or all sorts of different combinations. With both Navicure and Vertafore, we felt we had some really unique capability and experience to bring to bear. With Navicure, this is an opportunity where our tech-investment and healthcare teams partnered to bring both their areas of expertise together to really build something.

What’s your deal pipeline in what’s been a muted year for M&A?

We’re very busy right now. We’ve had a robust pipeline all year. Activity is comparable to last year. We have a number of opportunities that we’re looking at. We’re also very selective. We recognize that prices in the market generally and for [tech-media-telecom] businesses tend to be relatively high right now. We’re really focused on finding opportunities where we have a distinct advantage and a real clear thesis on what to do with the company once we buy it. In general, there’s a desire to be thoughtful and selective in a high-priced environment.

Edited for clarity by Steve Gelsi

Photo of David Humphrey courtesy of Bain Capital

Correction: This story has been updated to correct the year that Bain Capital bought Blue Coat. The company was purchased in 2015, not 2014.