Private equity's interest in US software isn't slowing down. And investors are willing to pony up, perhaps now more than ever.
The latest blockbuster: KKR has agreed to purchase BMC Software from an investor group led by Bain Capital and Golden Gate Capital, with reports indicating the deal is worth some $8.5 billion. If that's correct, it would mark a major win for Bain Capital and Golden Gate, which bought the Houston-based business software provider together with GIC, Insight Venture Partners and Elliott Management for a reported $6.9 billion in 2013.
It would also mark the biggest PE-backed deal for a software business since at least 2008, per PitchBook data. That excludes Silver Lake-backed Dell's $67 billion deal in 2016 to buy EMC because EMC's primary focus was providing enterprise data storage.
The massive BMC deal comes as private equity interest in the US software industry is on the rise. PE dealmaking in the space increased every year from 2009 until 2017, reaching a high of more than 500 transactions last year, according to the PitchBook Platform. This year is off to a strong start, with more than 250 deals completed in the first five months. It could very well surpass the 2017 total, especially if the deals that have been announced close by the end of the year.
Here's a look at PE deals in US software over the last decade:
It's been an eventful May for KKR. Earlier this month, the firm announced in its earnings report that it would convert from a partnership to a corporation on July 1, becoming the second PE firm to make the switch since the US Congress cut the corporate tax rate.
View the full data on PE investment in the US software industry.