Happy Monday, Hubsters. MK Flynn here with the Wire.
The week is off to a great start in dealmaking with a big exit announced by Vista Equity Partners earlier this morning.
The tech-focused PE firm is selling Apptio to IBM for $4.6 billion. We’ve got the details below.
Also on the tech theme, we’ve got an interview with Thoma Bravo’s Holden Spaht about a transaction involving the Nasdaq stock exchange and fintech specialist Adenza.
And we’ve got a Pride Month interview with Hamilton Lane.
As mentioned above, Vista has agreed to sell Apptio to IBM for $4.6 billion. The news is especially welcome in these exit-challenged days when many buyers and sellers are struggling to agree on transaction terms.
Based in Bellevue, Washington, Apptio develops cloud-based software in a relatively new category, known as technology business management, or TBM. The software aims to provide CIOs with insights on managing their company’s technology and associated costs.
Vista bought Apptio in a take-private deal for $1.94 billion back in 2019. During Vista’s ownership, Apptio doubled revenue and increased EBITDA margins by more than 4x, according to the PE firm. In the same period, Apptio closed five add-ons, including Cloudability, TargetProcess and Cloudwiry.
“We are committed to building resilient enterprise software companies, which has proven to be highly attractive to strategic and financial buyers, as well as public markets,” said Robert F. Smith, founder, chairman and CEO of Vista. “Our investment philosophy, value creation strategy, and industry expertise, enables us to identify and partner with companies that have the potential for long-term success. Apptio has transformed how leading organizations optimize their IT spend and performance for better outcomes.”
Vista has been active on the exit front lately, having closed its $4.6 billion sale of Cvent to Blackstone earlier this month.
That deal followed partial realizations of the firm’s investments in Tripleseat and Fusion Risk Management from its lower-middle-market Endeavor strategy in the Spring.
A lot of upside
Thoma Bravo expects its new investment in Nasdaq to reap dividends as the market buys into the multinational financial services company’s focus on technology, managing partner Holden Spaht told PE Hub Europe’s Craig McGlashan.
The private equity firm is taking a roughly 14.9 percent stake as part of a deal in which Nasdaq acquires Thoma Bravo portfolio company Adenza for $10.5 billion – comprising $5.75 billion in cash and the rest in shares.
That means a return on investment of more than double for San Francisco- and Chicago-headquartered Thoma Bravo, according to sources familiar with the situation. The private equity firm declined to comment on the return.
Thoma Bravo had only held Adenza for a few years before Nasdaq came calling. That meant the process was exclusive – but bilateral.
“We always feel like if the right strategic buyer is interested in one of our portfolio companies – regardless of where we are in our investment horizon – we need to listen,” said Spaht, who is expected to join Nasdaq’s board in New York once the deal closes.
“As Nasdaq was doing its due diligence on Adenza, we were doing our due diligence on Nasdaq. The more we saw, the more we liked. We see a lot of upside as the cost and revenue synergies are realised and the deal becomes accretive in the coming years.”
Nasdaq’s share price took a hit after the deal became public on June 12, falling from about $58 to $51, where it has hovered around since. But Spaht is confident that investors will buy into the story.
“We also believe there is a fundamental revaluation opportunity for Nasdaq’s earnings as the market and shareholders begin to appreciate how software- and technology-centric the business has become,” he said.
That is in keeping with comments over the last few years from Nasdaq chief executive officer Adena Friedman, who has made tech a priority.
The acquisition of Adenza, a fintech firm with dual headquarters in London and New York, fits that strategy. Adenza has more than 60,000 users at banks, broker dealers, insurers, asset managers and other companies. The company’s estimated revenue for 2023 is $590 million, while organic revenue growth is around 15 percent, annual recurring revenue growth is 18 percent and adjusted EBITDA margin is 58 percent.
It has a “unique financial profile – a combination of growth, profitability and revenue quality that is rare among software companies,” said Spaht.
The weekend was jam-packed with Pride Month activities here in New York, including the NYC Pride March and the PrideFest street fair.
Throughout June, PE Hub Europe’s Nina Lindholm has been speaking with members of the LGBTQ+ community who work in private equity.
Here are excerpts from Nina’s conversation with Ada Pospi, an associate on the secondaries investment team at Hamilton Lane, based in the firm’s London office:
Why is Pride Month important to you and your firm?
For me, Pride Month is a time to celebrate the progress in LGBTQ+ rights since the Stonewall Riots in 1969, while reflecting on the continued challenges our community faces around the world.
Since I first came out as bisexual about eight years ago, I have been flying back home to Poland every summer to attend pride marches and parades; it has been incredible to see how much bigger and more joyous they get each year. Pride Month is about celebrating our successes in the journey towards equality, as well as recognizing the work that still needs to be done.
Within Hamilton Lane, while we run various LGBTQ+ initiatives throughout the year, Pride Month provides a particular opportunity to reflect on how we can best support the LGBTQ+ community as a firm. This June, we hosted an ‘Allyship in the Workplace’ talk, which addressed a range of topics around gender and sexuality in an incredibly accessible and judgement-free way.
I believe that most people want to be good allies, but often don’t quite know how to do that, and are scared of saying the wrong thing. Hosting talks such as this one provides an environment for employees to ask questions and understand how to best support their LGBTQ+ colleagues. Pride Month is also an opportunity for LGBTQ+ employees and allies across our global offices to connect and celebrate together. This year we also organized a ‘Show Your Pride’ day where employees wore rainbow- and pride-themed outfits to the office to celebrate Pride Month.
What challenges remain for LGBTQ+ people in the industry?
Coming out at work can be very daunting, and is a moment of real vulnerability, especially if there are no or few other openly LGBTQ+ people in your workplace that you could rely on for guidance and support (which in our industry is still very often the case, particularly in smaller firms). As a result, many LGBTQ+ people simply avoid talking about their personal lives at work – this might not seem like a big deal, but in reality, hiding such a significant part of your life takes up a lot of mental space and can be very draining. I strongly believe that being able to show up as your whole self at work is extremely important, not only for our mental well-being as individuals, but also in terms of reaching our full potential and productivity at work.
What are some of Hamilton Lane’s LGBTQ+ initiatives?
A group of us at Hamilton Lane formed HL Pride – an employee resource group for members and allies of the LGBTQ+ community. Over the last couple of years, we have been involved in a number of internal and external initiatives. Externally, we believe building connections across the industry is incredibly valuable, which is why Hamilton Lane supports Out Investors, a global network of LGBTQ+ investment professionals. HL sponsored an Out Investors event in San Francisco earlier this year, and members of our team have attended events in New York and London.
Internally, we have hosted some very informative talks, including the “Allyship in the Workplace” presentation, and an interview with Dr. Vivienne Ming, who spoke about the “tax on being different”. These talks are a great way to start some important conversations within the firm. We have also organized some informal initiatives, such as compiling a Pride Month Reading List. We continue to work on various projects and initiatives both internally and externally.
How can the industry improve its retention of LGBTQ+ talent?
I think it is important to remember that true allyship is not passive (ie, not acting in a homophobic/transphobic manner) but active – it is about showing up for your LGBTQ+ colleagues and providing an environment in which they can thrive. There are some very simple and effective ways of doing this – for example, including pronouns on name tags during annual meetings and other events. This means that the burden of sharing one’s pronouns is taken off attendants who are, for example, gender nonconforming, which helps create a more welcoming environment.
We’ll have more interviews from the LGBTQ+ private equity community later in the week.
That’s all for today. I’ll be back with more tomorrow.
All the best,