Silversmith-backed Absorb up for sale, Oval Partners offers unique deal structure to entice MSPs

Happy Tuesday, readers!

Dealmaking in the tech space is booming. Case in point: Silversmith Capital’s EdTech company Absorb Software just launched a sale process, adding to the flurry of brewing activity.

The learning technology provider finished its management presentations just yesterday and received strong interest from private equity firms, the people familiar said.

Shea & Co, a software-focused boutique investment bank, is advising the company on its sale, the sources said.

Absorb Software, based in Calgary, Alberta, Canada, provides learning management software, course building, and authoring tools for businesses, higher education, government and non-profit agencies around the world. Absorb has offices in London, Dublin, Shanghai, Sydney, Boston, Tampa and Salt Lake City.

Read Milana’s full story here.

Tech wave: Technology accounted for 20 percent of global M&A so far this year – when accounting for both strategic and PE-backed deals, according to Refinitiv’s latest report. Not unlike the robust activity ocurring in EdTech, MSP sellers are witnessing unprecedented demand from PE groups – a trend I wrote about last month.

As a result, Oval Partners-backed New Charter Technologies is structuring deals distinctively in order to acquire more MSPs in a shorter time frame. The young managed IT services company is set to close its tenth acquisition in under a year and announced a partnership with Braver Technology just last week.

MSPs partnering with New Charter can roll over part of the valuation, pretax, to own a percentage of the holding company.

The ownership percentage is based off the target valuation and proceeds the owner decides to merge into New Charter, but is “typically 30 percent of equity,” said John Knoll, co-founder at Oval.

That differs from other MSP acquirers, as PE firms generally allow management to roll a smaller portion or use different mechanisms to subordinate the stake. The ownership in New Charter carries the same economics as the shares owned by Oval Partners, according to a whitepaper shared by the firm.

Read my full report on PE Hub for more on how the California-based firm runs buyside processes for New Charter.

That’s it for me! Enjoy the week ahead, and as always, write to me with comments, feedback or tips at karishma.v@peimedia.com.