Cracking the Code in Private Equity Software Deals

Private equity firms have set their sights on a new wave of software companies hitting the buyout market. Although investments in such companies have the potential to generate high returns, success is far from assured. PE firms just getting into the game must rapidly “crack the code” of software deals in order to capture the outsize returns enjoyed by many investors with industry expertise.1

Like other investors, PE firms have been attracted to software companies by the potential for profitable growth and high valuation multiples. (See “Software’s Favorable Economics Attract Investors.”) As a share of their total number of investments, PE firms’ investments in software companies increased from 4% in 2007 to 8% in 2016. The number of annual acquisitions more than doubled, from 228 in 2007 to 481 in 2016. Read More ->

FinMarc Ventures