Insight brings E2Open back to market

Insight Partners is readying a sale of E2Open, a software provider for supply-chain management, three sources familiar with the process told PE Hub.

The process is expected to officially kick off in a few weeks; however, a group of interested parties have already received marketing materials, the people said.

Credit Suisse has been engaged to advise the company on its upcoming process, according to the sources.

Both large private equity firms and strategics are expected to be in the mix, the sources said. Potential strategic buyers could include players like Honeywell, Fortive and Roper Technologies, the people said.

Insight last year evaluated a sale of E2Open, PE Hub reported in April 2019, though the process did not result in a sale. One source noted that Insight was just “testing the waters” and the process was not formal.

E2Open, based in Foster City, California, provides cloud-based, on-demand software services for enterprises to procure, produce, sell and distribute products across global trading networks.

Its clients include Oracle, Canon, Caterpillar, Gap, Unilever, IBM, Lenovo, L’Oreal and HP, among others.

The company generates $150 million in annual EBITDA and is expected to produce $365 million in 2020 revenue, the people said.

E2Open could trade hands for as high as 20x EBITDA, which would imply a valuation of up to $3 billion in a sale, some of the sources said.

Taking a more conservative view, the company could be valued as low as 15x EBITDA, translating to a valuation of around $2.25 billion, another source said. While attractive from a buyer perspective, a 15x multiple would be a disappointing scenario for E2Open, which is positioned as a leader in a lucrative supply chain software field, sources said.

“Valuation at 15x Ebitda in software — nowadays, it’s almost cheap,” one person said.

Insight will also be looking to assign value to recently acquired Amber Road in a potential transaction, sources said.

In May, E2Open acquired the cloud-based global trade management platform in a take-private valuing Amber Road at approximately $425 million.

To support the acquisition, E2Open took on a $950 million loan provided by Golub Capital.

The combination of Amber Road’s trade management and supply chain software with E2Open’s end-to-end network supply chain technology was aimed to improve margins, lower risks and drive operational flexibility and efficiency for E2Opens’s customers, according to CEO Michael Farlekas.

Supply chain software is in a good place right now with more people anticipating a new “industrial revolution,” one of the sources said. As firms begin to rethink ways to operate more efficiently, companies like E2Open grow in demand, the person said.

In other activity, Insight has also launched a process for Diligent Corporation, a governance software company, PE Hub reported last week. Insight and Clearlake are exploring options for the company, including a recapitalization, in a deal that could ultimately value Diligent around $4 billion, sources said.

Insight, a New York-based firm, recently came back to the market to fundraise for its eleventh fund. The PE and VC firm is targeting $7.25 billion for Insight Partners XI, according to documents obtained by PEI, a sister publication of PE Hub.

Credit Suisse declined to comment. Insight Partners and E2Open did not return PE Hub’s requests for comment before press time.

Action Item: Read about the process for Insight’s Diligent Corp here.