Private equity interest in the US software sector has exploded in recent years, with activity jumping more than 40% between 2015 and 2017, per PitchBook data. So far, this year is on pace to continue that spike.
GTCR and Sycamore Partners have lined up the latest billion-dollar deal in the space, agreeing to purchase CommerceHub for a total value of about $1.1 billion. The company is a developer of cloud-based commerce software that works with retailers, brands and distributors such as Best Buy, Costco and Walmart. The firms will pay $22.75 per share in the take-private buyout, representing a 24.5% premium to the company's closing share price on Monday.
CommerceHub has been publicly traded since July 2016, when it debuted on the NASDAQ under the CHUB ticker symbol in a spin-off from Liberty Interactive. The commerce company's other prior backers include QVC.
In 2018, investors have already completed nearly 100 deals in the US software space, per PitchBook data, putting the sector on pace to easily exceed last year's total of 515. Already on track for about 140 transactions by the end of March, this quarter is shaping up to be one of the busiest of the past four years:
For GTCR, the purchase of CommerceHub is par for the course: Dating back to the start of 2010, more than 22% of its investments have been in the IT space, including more than two dozen software deals.
For Sycamore Partners, though, it's a major departure. The firm has previously invested almost exclusively in the B2C industry, with recent targets including retailers such as Staples and Belk. As software continues to eat the world, Sycamore surely won't be the last PE firm to see begin striking deals in the sector.