In a rare private equity deal for the tech sector, Leonard Green & Partners has agreed to purchase a stake in Iris Software from Hg for a staggering £3.15 billion (approximately $4 billion). This move marks a significant vote of confidence in Iris, a UK-based provider of software solutions for accounting, payroll, human resources, and education sectors.
A Shared Vision for Growth:
The deal will see Leonard Green become a co-controlling shareholder alongside Hg, with the latter reinvesting in the company. This strategic partnership aims to fuel Iris’s continued expansion, particularly in North America, which already contributes over 25% of its revenue.
Breaking Through the Tech Dealmaking Slump:
This acquisition comes amidst a challenging year for tech M&A activity, with rising interest rates dampening investor enthusiasm. However, December has witnessed a surge in last-minute deals, as companies scramble to close transactions and salvage the year’s performance. Bloomberg News had hinted at the potential for this deal earlier in the week, adding to the excitement surrounding the announcement.
A History of Success:
Hg has been a long-term supporter of Iris, initially investing in the company back in 2004. Their continued involvement alongside the arrival of Leonard Green, a renowned private equity firm with extensive experience in the software sector, bodes well for Iris’s future growth. Additionally, Intermediate Capital Group Plc will remain a minority investor, further solidifying the company’s financial backing.
Advisors on Both Sides:
Arma Partners and Rothschild & Co. provided advisory services to Hg in this transaction, while Jefferies International and William Blair acted as financial advisors to Leonard Green.
A Turning Point for Tech M&A?
The Iris Software deal could be a sign of a potential revival in tech M&A activity, particularly in the software sector. Despite the current economic headwinds, attractive valuations and promising growth prospects in specific areas could entice investors back into the market.
In Conclusion:
The acquisition of a stake in Iris Software by Leonard Green marks a significant development in the tech M&A landscape. This deal highlights the continued potential for growth in the software sector, even amidst broader economic challenges. With experienced partners like Hg and Leonard Green on board, Iris is well-positioned to capitalize on this growth and further solidify its position as a leading provider of software solutions across multiple industries.
