Insight Bite: Advanced Acquisition Signals Private Equity Appetite for Enterprise Software

Slough-based software company Advanced is not shy about its mission – becoming the biggest enterprise software vendor in the UK.

To this end, the rapidly growing firm has secured an investment thought to be worth around £2 billion from private equity firm BC Partners. This will give the investors a fifty percent stake in the company alongside Vista Equity Partners, which bought Advanced for £725 million in 2015.

Since then, the company has pursued rapid growth, recruiting more than 900 new staff across three locations, and embarking on an acquisition spree that has seen it become the
the third largest British enterprise software vendor, with clients including the NHS, British Gas, National Express, the BBC, Specsavers and Virgin Atlantic.

Advanced provides these clients with a broad set of cloud-based solutions and services, which are expected to be improved and expanded on with the freshly available spending power.

“Advanced has the hallmarks we look for in our investments. A market leader in a growing sector, with a strong management team and multiple levers for growth, both organic and by acquisition. ” said Nikos Stathopoulos at BC Partners. “We are pleased to partner with Vista and the Advanced leadership team to drive even more success for this high-quality business.”

Though no financial details were disclosed, the estimated £2 billion investment would make the deal one of the largest current private equity investments in a UK software firm.

This comes as private equity firms are taking a growing interest in software companies. Part owner of Advanced, Vista Equity, announced last month that it had raised $850 million for a second fund dedicated to investing in early-stage enterprise software companies, and global investment firm KKR purchased accounting software provider Exact in February – one of many similar acquisitions.

Steady innovation in software means enterprises must routinely update and adapt their systems to stay competitive, and private equity investors that can pinpoint profitable firms have the chance to achieve high valuation multiples and outsized returns on their investment.

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