PE Finding Value in Small Software Companies

MINDBODY, a portfolio company of Catalyst Investors, has acquired ClientMagic Software. The companies develop and provide scheduling and business management software. MINDBODY got its start servicing pilates and yoga studios, and with this acquisition expands further into other areas such as salons and spas. The company received a growth investment from Catalyst in January 2009.

Software has been a relatively hot sector for private equity investment over the past four months with 35 completed and announced deals, according to the PitchBook Platform. Together, the deals total just shy of $1 billion, with a median deal amount of $35 million. The two largest transactions in the space, which together total slightly more than half of total deal flow by capital invested, were Symphony Technology Group's $390 million deal for MSC Software and Vista Equity Partner's $128 million buyout of Intuit Real Estate Solutions. The sizes of the software industry investments show that private equity investors are continuing to find the best opportunities in the industry with lower and middle-market companies.