Enterprise Software & Technology Focus

The global supply and demand of software make our buy-and-build strategy an ideal investment.

We focus on accelerating growth by transforming businesses in fragmented, consolidating software and technology sectors into larger, more profitable and more valuable businesses through rapid operational improvements, growth initiatives and strategic and accretive add-on acquisitions.

Enterprise Software & Technology Focus

The global supply and demand of software make our buy-and-build strategy an ideal investment.

We focus on accelerating growth by transforming businesses in fragmented, consolidating software and technology sectors into larger, more profitable and more valuable businesses through rapid operational improvements, growth initiatives and strategic and accretive add-on acquisitions.

Anatomy of a Private Equity Deal

Anatomy of a Private Equity Deal

Investment Deal Sourcing

Our team sources acquisition candidates and conducts initial analysis of the company and its growth potential.

Investment Due Diligence

We conduct a thorough due diligence review. If we determine to move forward with a particular acquisition candidate, we will proceed to structure and negotiate terms of the acquisition.

Investment Period

Private equity investments are traditionally long-term investments with typical holding periods ranging between three and five years. Within this time period, Cebron Group focuses on increasing the value of the portfolio company.

Exit

We plan to exit our investments using one of major mechanisms: IPO or sale to a strategic or financial acquirer and distribute proceeds to our investors.

Disciplined Due Diligence

Our investment approach is based on a disciplined due diligence process that measures risk while identifying the catalysts to transform businesses into larger, more profitable and more valuable businesses through rapid operational improvements and a accretive add-on acquisitions for increased value. We work with talented management teams to achieve positive results.

New: Transformative Impact

We strive to create value by investing in great businesses where our capital, strategic insight, global relationships and operational support can drive transformation. We have identified the following attributes and guidelines to evaluate prospective acquisition candidate businesses:

Market leading software franchise

We prioritize acquisition candidates with a market-leading software platform on which we can partner with management to build upon and innovate. We believe a leadership position affords a company the opportunity to drive outcomes for their market and more easily capture the mindshare of customers.

Strong momentum and a differentiated growth opportunity

Our bias is for growth and focus our attention as investors on growing businesses where our partnership with management and implementation of best practices will accelerate business momentum. The software market is home to many high growth companies benefitting from the increasing pace of digital transformations.

High ability to achieve operational improvement

We focus on having the ability to make operational improvements at or shortly after completing an acquisition. Quickly implementing operational improvements typically minimizes business disruption and ensures that changes are, in fact, made and their impact felt promptly.

High proportion of revenue from predictable, recurring sources

We aim to acquire companies  with a high proportion of revenue derived from recurring revenue sources, which translates into reduced volatility in revenue and earnings. Ideal candidates would have a high percentage of subscription revenue that does not require recurring sales efforts, with products or services that are critical to their customers, and relationships that would be costly and disruptive to change.

Strong management team

We believe that management continuity can reduce the risk associated with an investment. We look for a management team with a track record of delivering consistent performance that we can partner with to drive growth and operational improvements.

Fragmented market with near-term inorganic growth opportunities

We seek to create value by helping transform a business in a fragmented, consolidating industry sector into a larger, more profitable and more valuable business. Fragmented markets provide an interesting opportunity for consolidation, which make for an attractive means of growth given the abundance of synergies available in strategic combinations of software companies.

Sensible valuation

We have a deep understanding of private valuations and will aim to negotiate terms that will provide significant upside potential while limiting downside risk.

Rapid Growth and Favorable Economics

With record numbers of office workers working from home, cloud, server and connectivity needs have In an increasingly digitized world, software applications have become omnipresent in businesses. There are three broad categories of software: horizontal applications that cut across industries (such as for customer relationship management and enterprise resource planning), vertical applications for a specific industry (such as health care or insurance), and infrastructure software (such as for IT security and network management).

The global market for these applications has grown faster than the GDP of Western countries, and analysts expect this impressive growth to continue. In fact, Gartner projects that the global software market will grow by approximately 10% each year through 2024. From a buyer’s perspective, the software industry is attractive because of several factors:

A Large and Growing Industry

The megatrend of digitization is propelling high growth in the software industry—many segments are growing at an annual rate of more than 10%.

A High Potential for Scaling Profitably

Because the product has already been developed, an incremental increase in sales does not lead to a corresponding increase in costs for inputs.

Recurring Revenues

Many software business models feature recurring revenue streams—such as annual subscription or licensing fees and a periodic maintenance charge.

Customer Stickiness

Churn rates are typically quite low, owing to high switching costs for customers. This is especially true for business customers. Software, once adopted, can become integral to business operations.

An Abundance of Potential Acquisition Candidates

The software industry is fragmented, offering the potential for consolidation. More than 10,000 assets globally are held by private equity and venture capital owners, and many more are in public markets (approximately 1,500 companies) or privately held (more than 40,000).

The high growth rate, favorable economics, and numerous prospective acquisition candidates promote the overall attractiveness of software companies.