Huron Capital makes enterprise software services play with new platform

No matter the economy or time of year, private equity firms will show up for enterprise software. Investors like the predictability and the recurring revenue that comes with investing in software used by organizations.

“The market opportunity is large, fragmented and supported by long-term secular tailwinds,” Tony Pulice, partner, Huron Capital Partners, told PE Hub. “Over the last few years, there has been an in increase in the number, specialization, accessibility and integration of enterprise applications.”

The Detroit-based private equity firm recently launched Enterprise Application Services, a “consulting-forward business” – one that helps companies select, customize and service various software applications and align business processes to run their organizations more effectively.

Huron hasn’t historically invested in a pure pure play software platform. Many of its businesses have either acquired or built internally some level of proprietary technology.

But the firm saw that enterprise software has several opportunities. An attractive piece is that enterprise software has the ability to develop lifetime value for customers. Many enterprise software platforms have high retention rates and provide critical components of day-to-day operations.

“Enterprise applications were once designed around IT infrastructure, but are now being designed around business processes, or the ways people get work done,” Pulice said. “Applications serve as data repositories. Helping companies access the right data at the right time is a critical first step towards eventually leveraging emerging technologies, such as AI. Our organization will help companies navigate this increasingly complex journey.”

Enterprise software also permeates across different sectors, such as the supply chain, human resources, industrial manufacturing and energy.

Partnering up

EAS is being created through Huron’s ExecFactor strategy, in which the firm underwrites an industry and partners with an executive to identify the market opportunity and set up a holding company.

For EAS, Huron last year teamed up with Gene Chao, who has worked with technology consulting companies, such as IBM and Unisys, as well as serving as chief growth officer at Amelia, a New York-based business that focuses on artificial intelligence and cognitive and autonomic products.

Chao’s “experience across well-known technology consultancies through emerging technology companies makes him an ideal leader for the platform,” Pulice said. “We look forward to pairing an executive like Gene with our sector-focused approach to drive successful outcomes for entrepreneurial CEOs, management teams and others with whom we will partner on the EAS platform.”

With EAS as the platform company, Huron and Chao are actively looking for add-on investments. “Add-ons for the EAS thesis will bring together various technology ecosystems and enable key emerging technologies such as generative AI, autonomous workflow capabilities and interoperability across industry-specific business environments,” Pulice explained.

ExecFactor exits

When asked about previous ExecFactor investments by Huron, Pulice said the primary focus of all ExecFactor M&A deals is market expansion, technical talent attraction and retention activities.

The strategy has yielded successful exits for Huron.

In January 2018, Huron invested in Tucson, Arizona-based Pueblo Mechanical & Controls Inc, a provider of HVAC replacement, retrofit and repair services primarily for facilities in education, municipal and healthcare end markets. The firm launched Pueblo with Dan Bueschel. Huron sold Pueblo to Toronto, Canada-based OMERS Private Equity in August 2022.

The firm launched San Francisco-based Sciens Building Solutions, a full-service commercial fire and life safety company in 2015 with with former Siemens executive, Terry Heath. The firm sold a majority stake in the company to Washington DC-based PE firm the Carlyle Group in December 2021. Huron retained a minority equity stake in the business.

In August of 2018, Huron launched High Street Partners, a Traverse City, Michigan-based insurance agency in partnership with Scott Wick and Randy Koch. In April 2021, the firm announced the sale of a majority interest in High Street to Boston-based private equity firm, Abry Partners.