By: Bailey McCann, Private Equity Strategies
Boston-based TA Associates, a global growth equity firm is taking a majority stake in Accruent. Accruent provides real estate and facilities management software and has been in business since 1995. TA took over the majority interest from another private equity firm, Vista Equity Partners, which will still maintain a significant, although not controlling interest in the business.
Accruent provides market planning, site selection, project management, lease administration, facilities and space management software that is purpose-built for specific industries. TA Associates makes growth equity investments globally, and has to date raised approximately $18 billion in capital and invested in more than 430 companies.
Vista Equity Partners has had a four-year interest in the firm, overseeing four strategic acquisitions. Accruent is now the largest independent provider of this type of software. The customer base has grown from 400 to over 1,200 customers that use the company’s software in 56 countries.
Typically, growth equity stories go to newer companies, but Hythem T. El-Nazer, a Director at TA Associates explains that TA still sees significant opportunities for growth. “Over the last decade or so we have done several transactions where we are recapitalizing a business and partnering with existing investors. I think it was a real positive in our mind that Vista wanted to stay,” he tells Private Equity Strategies. “This is a new relationship for us with Vista, but we are very comfortable with the team.”
In a recent report, Gartner estimates that, “By 2015, more than 75% of the Forbes Global 2000 companies will manage the No. 2 enterprise budget item (facilities) with Integrated Workplace Management Systems (IWMS). The C-suite is beginning to take notice of the enterprise’s second largest budget item — the life cycle of its facilities portfolio — and to seek an integrated solution to its management.”
Over the last four years, Accruent has updated its business model and products from on-premise software to cloud-based solutions that are easier and less expensive for customers to implement. One hundred percent of the company’s new software revenue is now derived from cloud products. The company has posted 15 consecutive quarters of EBITDA growth while increasing customer satisfaction by 39% and attaining customer retention of 96% during this period.
Over the near term it looks like Accruent will remain private, when asked about an exit strategy, El-Nazer, said, “When we make our investments we don’t always look at an exit strategy. We believe that as the company executes there will be a variety of opportunities to consider. Accruent has many of the hallmarks of a TA company; it is growing and has a solid product offering. The market for their services is still fragmented and we think that will provide organizing and acquisitional opportunities for us to take advantage of.”
He expects similar transactions over the coming year. “2013 was similar to 2012 for us – very active dealflow. We expect that to continue through 2014.”
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.