Vista Equity Partners broke its flagship fund’s take-private streak with the acquisition of Jaggaer, a developer of enterprise procurement and supplier collaboration software, in an example of private equity’s deepening foothold in enterprise software.
Tuesday’s announcement capitalizes on an exception to the widespread lethargy in private market dealmaking: Enterprise SaaS buyout activity has seen a rebound since 2023 with an estimated 59 buyouts of SaaS companies in Q1 2024 compared to 42 in Q4 2023, according to a recent PitchBook analyst note.
While venture capitalists have long pursued opportunities at the lower end of the market, PE managers have gone after the bigger deals and have been a larger part of the market’s most recent recovery. From Q1 2018 to Q1 2024, M&A of PE-backed enterprise SaaS companies totaled $360 billion, coming in above publicly held companies and well above founder-owned and VC-backed firms.
Vista is among the top PE investors in enterprise SaaS companies. Its peers include Thoma Bravo, which took critical event software company Everbridge private this year for $1.8 billion in cash, and TA Associates, which has participated in the largest number of deals of any PE firm in the sector since 2018.
The combination of attractive enterprise SaaS company multiples and confidence about an impending interest rate cut that would bring down the cost of capital from leveraged buyouts has fueled the mild recovery, said Derek Hernandez, senior emerging technology analyst at PitchBook.
At the same time, the deal comes at a pivotal moment for Vista, which closed its eighth flagship fund on $20 billion in April after reportedly extending its fundraising period to bring in more capital to the strategy dedicated to software deals.
The transaction also marks the first investment made by Vista’s flagship large-cap buyout strategy in over two years that isn’t a large take-private transaction.
Since October 2022, Vista’s main fund has invested primarily in public-to-private transactions, including its $8.4 billion acquisition of tax compliance automation provider Avalara and its $4.6 billion purchase of education software company KnowBe4.
Vista purchased Jaggaer from UK-based PE firm Cinven. The financials of the transaction were not disclosed, but Cinven acquired the collaboration software maker for about $1.6 billion in 2019. Bloomberg reported Vista may have paid close to $3 billion for the business.
Featured image by Andriy Onufriyenko/Getty Images
