Insight Bite: KKR goes big again with BMC deal, as PE companies have cash to spend

KKR has announced plans to buy BMC Software in a deal reported to be valued at $8.5 billion. This would be the private equity giant’s biggest acquisition since the financial crisis.

BMC’s software helps companies manage their IT operations. The company is being sold by fellow private equity firms Bain Capital and Golden Gate Capital, which paid $6.9 billion for the business when it was acquired in 2013. Since 2013, BMC has reallocated significant resources toward higher growth R&D and go-to-market initiatives. It’s not known why the former PE owners decided to sell at this point, but commentators have pointed out that BMC hasn’t made any deals in years. It’s possible that the rumoured merger with CA last year fell through due to unsupportive owners, and that this could have spurred a change. In any case, KKR is expected to use BMC as a platform to make further acquisitions, having specifically mentioned M&A in its statement about accelerating growth.

“In an ever-changing IT environment that is only becoming more complex, companies that help simplify and manage this essential infrastructure for their enterprise customers play an increasingly important role,” said John Park, head of the KKR’s Technology, Media & Telecom industry team.

With BMC, KKR is betting on the trend of technology companies moving towards cloud computing, analytics and data security as they transition away from legacy operations. The deal comes as private equity firms seek to put large amounts of unused funds to work. This year, private equity firms have announced buyouts of portfolio companies owned by competitors worth more than $36 billion, according to Dealogic. While deal volume for the year is down 16% compared to last year, it’s still a strong start that inspires optimism.

While joint PE deals are still less popular than before the crisis – companies prefer independence – KKR and its peers should still be able to make headlines this year as they certainly have money to spend. Our eyes are peeled as the year’s mega-deals are, in all likelihood, being drafted as we speak.

About Acuity Advisors

We know technology – that’s why we’re the industry’s trusted M&A advisor. Our partners are senior players in tech and M&A: skilled at getting to the heart of a technology business, understanding what will attract buyers, and building long-lasting relationships. We have an unrivalled understanding of the industry’s complexities and personalities – our track record and client feedback are compelling evidence of that. We’re an international firm – most of our deals are cross-border, from offices in London, Munich, Shanghai and Silicon Valley – but we’re grounded in our approach. We move quickly when it’s needed, and we’re around for the long haul when patience is a virtue. We’ve maintained a very high success rate across hundreds of deals while keeping our focus on doing what’s right for our clients. From first meeting to successful exit, we earn the trust that clients and investors put in us. Learn more here.

© 2018 Acuity Advisors LLP

A conversation is never wasted. We’re confident that we can give you all the help you need, but we’ll tell you if we think there’s a better option for you.

Get in Touch Get in touch now