Harbor Ridge Capital has been covering the technology services and vertical software industries within the lower middle market ($5-50mm in revenue) for over 15 years, and while we primarily represent CEOs in a sale or capital raise, we’ve augmented this practice by securing buy-side agreements with a select number of highly strategic acquirers and investors that focus on these same verticals. This allows us to facilitate connections between our network of CEOs and these investors or buyers, as we see fit, in lieu of, or instead of, running a full process. For entrepreneurs interested in a transaction, this can serve as a great way to get quick tangible feedback from high quality sources, who may not be on your radar, regardless of whether a company is down the line with one party, or is even working with a banker. What makes the groups below so strategic, is the significant experience within technology services and software, usually from several past successful investments. This translates to a seamless understanding of company value, an ability to contribute beyond capital, and often pay a higher price as a result. Below are profiles of our most active buyers and investors where buy-side agreements are in place, and what they are most interested in:

  • Boston-based PE firm managing $1.7 billion; invests $15-50mm of equity in variety of transactions including majority/minority recapitalizations, full buyouts, and growth capital
    • Seeking companies with >$3mm in EBITDA
    • Deep expertise in technology services, internet infrastructure, managed IT services, IT services, and vertical software; active in healthcare IT as well
    • Portfolio companies seeking smaller add-on acquisitions ($1-5mm in EBITDA):
      • Regional managed IT services (regional and or vertical focused)
      • Managed cyber security services (MSSP/MDR/Consulting)
      • Software/Services for government agencies – state/local primarily
      • MSFT focused cloud/managed services
    • Positioning:
      • 70-80% of activity is in business/tech services (deep understanding and focus)
      • Just raised fund of $700mm thus seeking to put $ to work
      • Can do minority deals, growth and or liquidity as well as buyouts

 

  • Southeast-based PE firm, just raised a $1.4 billion fund, investing $25-125mm per investment
    • Target companies with revenues of $10-150mm, focused on verticals including: business/technology services, communications, and healthcare
    • Deep expertise in all areas of technology, cloud, and managed services, including managed cyber security services
    • Portfolio companies seeking add-ons acquisitions for platforms ($1-5mm in EBITDA):
      • MSFT Azure cloud partners
      • CRM cloud partners
    • Positioning:
      • One of most active and successful investors/acquirers in technology services
      • With fund size seeking larger companies for new platform deals
      • Given experience and success, understand quality assets in technology services, and thus willing to pay appropriately

 

  • Bay Area-based PE firm focused on acquisitions of software companies
    • $1 billion fund raised last year has a lot of dry powder
    • Seeking software companies with >$1mm in EBITDA with high repeat/recurring revenue and ~90% customer retention
    • Seeking smaller add-on acquisitions in following software domains:
      • Marketing, Government, Medical, Legal, and Logistics
    • Positioning:
      • One of top tier firms for software buy-outs
      • Unique in that they require software companies to be profitable (for platform acquisitions)
      • Entrepreneur in residence led format
      • More growth centric vs. value from a valuation perspective

 

  • Bay Area-based PE firm focused on technology services and vertical software
    • ~$500mm fund raised last year, focused on buyouts
    • Deep expertise in technology/cloud/IT services; companies that are $2mm+ in EBITDA
    • Portfolio Companies seeking add-ons in managed IT services, cyber security services, managed/vertical hosting, MSFT azure cloud, and CRM cloud services,
    • Positioning:
      • One of most experienced cloud/technology services investors and acquirers
      • Can write a check as small as $15mm for new deals, smaller for add-ons

 

  • Southwest-Based Alternative Debt Fund
    • Excellent avenue for those seeking debt to minimize dilution
    • Debt investment size of $10-40mm, up to 4x leverage of pro-forma EBITDA, with companies >$2mm in EBITDA stand-alone trailing
    • Traditional mezzanine debt type pricing

 

  • Former Entrepreneurs Who Sold Their Prior Businesses, Seeking Acquisition Opportunities
    • Entrepreneur sold his business for >$100mm, seeking managed security VARs, Consulting and or MSSP/MDRs
    • Entrepreneur who sold his cloud services business is seeking to acquire a legacy internet infrastructure business that can be modernized with the cloud
    • Entrepreneur who sold his cloud services business is seeking to invest in or acquire a cloud business in a high growth segment

 

Should any of the above profiles resonate with your financing and or M&A objectives, and or if you would like to receive broader feedback on your strategic plans, please do not hesitate to reach out to discuss.