You’re reading Value Add’s weekly briefing, the leading newsletter for the operating side of private equity. Here’s what you need to know this week, from insights for PE-backed executives and portco news to recent buyouts and investment trends. 

Insights

Chart of the Week: PE-backed exits of financial service companies have been decreasing since 2021’s high, with 2023 exits nearly on par with pre-pandemic levels. Overall in 2023, exits for financial services were less popular than all other sectors (technology, industrial, consumer, energy, and healthcare). Technology saw the most exits, with 264. 

Spotlight

Permira has agreed to sell half of its stake in Alter Domus to Cinven. Alter Domus is a leading fund administrator for the alternative investment industry with nearly $2.5 trillion in assets under administration. The company was founded over 20 years ago in Luxembourg. The deal introduces Cinven as a new strategic investor with the intent to support the company’s long-term strategic growth by leveraging its team's expertise and global scale. The deal values Alter Domus at $5.3 billion, with EBITDA increasing 5x since Permira’s initial acquisition in 2017 and assets under administration increasing by +69% since 2021. 

How did Permira help Alter Domus improve company performance?

• Effective Strategic Planning: Since Permira’s acquisition in 2017, Alter Domus has expanded its market share in the fund administration industry by successfully introducing new capabilities for open-ended and liquidity-managed private market funds, including European long-term investment funds. New features include support for NAV calculations, enhanced efficiency with settlement processes, overall improved network connectivity for distribution services, refined regulatory reporting, and white-glove support as a registered transfer agent for Luxembourg-based funds. These enhancements further broaden the company’s overall fund-administrator capabilities.
• M&A: In 2021, Alter Domus acquired IPS Fund Services, a Boston-based fund administrator with $9 billion in assets under administration which helped it to enter the North American market. Just over a month later, Alter Domus followed with another acquisition of Strata Fund Solutions, a Utah-based fund administrator with $140 billion in assets under administration. In May of 2023, Alter Domus acquired Solvas, a loan and debt servicing company founded by Deloitte, with the intent to grow technology and servicing support capabilities. 
• Digital Transformation: Alter Domus has been highly focused on digitization in recent years, going to market with new technology that helps clients manage and optimize risk in their financial portfolios. The company’s tech strategy has three branches that consist of the following: acquiring data-focused companies, partnering with companies that provide state-of-the-art technological experiences (such as eFront and Yardi), and developing original tech-based solutions such as CorPro, VBO, and Agency360. In 2020, Alter Domus launched an ‘Accelerate’ program, investing $125 million in companywide digital transformation. 
• Management Changes: In 2021, Alter Domus appointed Michael Janiszewski, the former COO of BNY Mellon’s Securities Services and Digital business, as its COO. Janiszewski has over 20 years of experience in business strategy development, operational management, and technology innovation More recently, Alter Domus appointed Amaury Dauge as its new CFO. Dauge has an extensive background in finance, previously serving as CFO of Allfunds and Euronext where she led both companies through the IPO process. 

Buyout News

Summit Partners is looking to exit men’s personal care brand Dr. Squatch for $2 billion. The PE firm is working with investment banks Raymond James and Centerview Partners to find potential buyers. The company reportedly generated EBITDA of $90 million last year, suggesting rapid growth given a valuation that would be more than 20x earnings. The company was founded in 2013 and instantly made a name for itself with its organic and natural handmade soaps for men. Since then, the company has diversified its offerings into a wider range of men’s hygiene products, including deodorant, cologne, lotion and hair care. By 2020, the company had grown by over 4x and surpassed $100 million in revenues. In 2021, Dr. Squatch gained distribution at Walmart, placing its products in over 1,600 of the retailer’s stores. (Source)

BC Partners is selling a majority stake in Presidio, an IT provider, to Clayton Dubilier & Rice. Financial terms were not disclosed, but BC Partners almost sold the company for $4 billion in 2021. Presidio delivers IT software solutions for over 6,600 customers, including Amazon, Microsoft, Google, and Cisco Systems. (Source) 

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