Norwest Venture Partners found a buyer for Avetta, the risk management software company it has owned since 2013, in Welsh, Carson, Anderson & Stowe.
The New York private equity firm is buying a majority of Avetta, while TCV is getting a minority. Norwest is keeping a stake, along with company founders and management. Terms weren’t disclosed but two sources pegged the sale at about $500 million.
William Blair, which advised Avetta on the sale, reached out to prospective buyers in February, Buyouts reported. The company was expected to fetch $200 million to $300 million, Buyouts said.
Norwest and Avetta’s management preferred a PE deal over a sale to a strategic, one of the sources said. “Management and Norwest think there’s much upside left in [Avetta’s] business and a lot more value to be created,” the person said.
The process was narrowed to three bidders: Francisco Partners, Welsh Carson and TCV, the source said. Francisco, a San Francisco buyout shop, did not emerge victorious, while TCV ended up pairing up with Welsh Carson, the person said.
Avetta, Irvine, California, supplies cloud-based risk-management software to businesses in sectors such as oil and gas, chemicals and transportation. The company produces run-rate cash EBITDA of $25 million, while forward was $35 million, the second source said.
In 2013, Norwest Venture Partners invested $35 million in the company, which was then known as PICS Auditing. Norwest acquired a minority stake. The company changed its name three years later, in 2016, to Avetta, to reflect its evolution and focus on clients’ needs.
Welsh Carson is one of the oldest PE firms. Founded in 1979, WCAS invests in growth companies in the healthcare and technology sectors. The firm is investing out of its 12th flagship fund, which closed on more than $3.3 billion in 2015, PitchBook said.
TCV targets growth-stage public and private companies in sectors including internet, software and enterprise IT. The Palo Alto, California, firm is a major fintech investor. Deals include Automated Trading Desk, Green Dot and Payoneer.
PE sponsors in 2017 became a prominent third source of liquidity for venture capital with private equity accounting for 18.5 percent of all exits in 2017, PitchBook said.
There were 234 buyouts in 2017, representing $8.07 billion, the Seattle data provider said. The number of deals was up about 24 percent from 2016 when 188 LBOs were valued at $4.29 billion, PitchBook said.
Sales to strategics remained the most popular way VC firms exit their deals. Last year saw 917 transactions valued at $45.67 billion, down from 1084 in 2016 that represented $57.52 billion, PitchBook said.
Pete Dalrymple, Christopher Lane, Michael Holbrook, Robert Abbe and Alex Quinn of William Blair advised Avetta and Norwest.
Brendan Ryan, Ian O’Neal and Graham Hurtt of Raymond James provided financial advice to Welsh Carson.
Welsh Carson, TCV, Norwest and Avetta could not be reached for comment. Executives for William Blair declined comment.
Action Item: Contact John Herr, Avetta’s CEO, at +1 949-936-4500
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