Blockbuster deals may be few and far between, but that doesn’t mean deals aren’t getting done. Fortune has learned that Vista Equity Partners has bought a majority of Gatekeeper, a vendor & contract lifecycle management platform.
The transaction values Gatekeeper at more than $100 million, according to people close to the deal. It is the U.K. company’s first outside investment since its launch in 2012.
Gatekeeper started out as a procurement consultancy, helping large businesses optimize the cost of their IT contracts, said CEO and founder Patrick O’Connor. It ended up with “tens of thousands of contracts to manage,” he said. This spurred Gatekeeper to seek a solution in the market and were underwhelmed by what they saw, he said. They ended up building their own software to help companies centralize contract data, as well as manage vendor and third-party relationships, O’Connor said. “We allow customers to restore visibility, take back control and safeguard compliance,” he said.
Gatekeeper now has over 300 global customers, including Autotrader, Pizza Hut, The Telegraph and Crocs. It is cash flow profitable and employs a staff of 92 people. “We are a completely remote and distributed SaaS company,” O’Connor said.
Companies typically use spreadsheets and online drives to manage their contracts and vendor relationships. “It’s a very messy problem to solve and it’s completely greenfield. So, we now find ourselves in a scenario where the opportunity ahead of us is just incredible,” O’Connor told Fortune.
About four months ago, Gatekeeper launched a sales process. It hired Shane Seelig, a director at PEAK Technology Partners, to find a buyer. Early on in the process, Abhay Puskoor, a senior vice president at Vista Equity, visited Gatekeeper, spending the afternoon with O’Connor and his team in the Jersey Channel Islands. O’Connor said he was “super impressed” with Puskoor’s knowledge of the sector and his grasp of the opportunities available for Gatekeeper.
Gatekeeper ended up choosing Vista because it wants to expand in the VCLM space. “We really needed a partner that could put in both the capital, and the crucially [needed] expertise to take us from where we are now, and scale us into the dominant player within this new category that we’ve created,” said O’Connor, who is staying with the company he founded.
Vista’s investment is coming from its second endeavor fund, a small cap pool led by co-heads Rachel Arnold and René Yang Stewart. Endeavor focuses solely on companies that offer B2B software. It targets businesses that have recurring revenue of between $10 million to $40 million. In 2019, Endeavor fund II raised $850 million, according to a statement from that time.
The Gatekeeper transaction shows the enduring power of smaller deals. Global private equity deal valuations dropped nearly 50% to $1.2 trillion year-to-date through Oct. 16, while the number of transactions fell nearly 31% to 4,436 transactions, according to data from Dealogic. There have been just three LBOs valued at more than $10 billion this year, down from six in 2022.
But Vista’s Endeavor fund continues to do deals. Gatekeeper is Endeavor’s fourth investment this year. Other deals include Resilinc, Innovaptive, and Benchmark Gensuite so far in 2023. Endeavor has also posted exits, selling part of its stakes in Zapproved, Tripleseat, and Fusion Risk Management.
Gatekeeper may also consider going public, but any IPO would be “way down the line,” O’Connor said. “We’ve got so much opportunity to capitalize on and put ourselves in that position.”
See you tomorrow,
Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Nucleus RadioPharma, a Rochester, Minn.-based development, manufacturing, and supply chain organization for radiopharmaceuticals, which are designed to treat a variety of cancers, raised $56 million in Series A funding. Eclipse and GE HealthCare led the round and were joined by Echo Global, Fox Chase Cancer Center, Granger Management, and others.
- Procurify, a Vancouver, B.C.-based budget and spend management platform for companies, raised $50 million in Series C funding from Ten Coves Capital and Export Development Canada.
- Pantomath, a Cincinnati, Ohio-based data observability platform, raised $14 million in Series A funding. Sierra Ventures led the round and were joined by Bowery Capital and Epic Ventures.
- SwiftConnect, a New York City-based provider of software designed to let users store physical access credentials on mobile devices and smart watches, raised $10 million in new funding. Quadri Ventures led the round and was joined by others.
- Carbon Equity, an Amsterdam, Netherlands-based impact-based venture capital and private equity investing platform, raised €6 million ($6.3 million) in Series A funding. BlackFin Capital Partners led the round and was joined by 4Impact.
- Zeedz.io, a Berlin, Germany-based video game designed to educate players on climate change, raised $1 million in seed funding from Carsten Maschmeyer, Tillman Schulz, Dagmar Wöhrl, and others.
PRIVATE EQUITY
- Searchlight Capital Partners and British Columbia Investment Management Corporation agreed to take Consolidated Communications Holdings, a Mattoon, Ill.-based broadband and business communications provider, private for approximately $3.1 billion, including debt.
- L Catterton took Thorne HealthTech, a New York City-based vitamin maker, private for about $680 million.
- ActiveCampaign, backed by Silversmith Capital Partners, acquired OneSend, a Chicago, Ill.-based suite of tools that include email and SMS sending services and account management services. Financial terms were not disclosed.
- Godspeed Capital acquired Stengel Hill Architecture, a Louisville, Ky.-based architecture and interior design firm for healthcare facilities. Financial terms were not disclosed.
EXITS
- Aquarian Holdings acquired a minority stake in Obra Capital, an Austin, Texas-based alternative asset management firm, from Reverence Capital. Financial terms were not disclosed.
- Arcline Investment Management agreed to acquire Hartzell Aviation, a Piqua, Ohio-based manufacturer of aircraft products and components, from Tailwind Technologies. Financial terms were not disclosed.
OTHER
- Patria Investments agreed to acquire the private equity solutions business of abrdn, a Philadelphia, Penn.-based investment company and asset manager, for up to $122 million in total considerations.
IPOS
- Mach Natural Resources, an Oklahoma City, Okla.-based oil and gas production company, plans to raise up to $210 million in an offering of 10 million shares priced between $19 and $21. Bayou City Energy Management backs the company.
PEOPLE
- Reynolda Equity Partners, a Winston-Salem, N.C.-based private equity firm, hired Ben Roberts as investor relations associate. Formerly, he was with Plexus Capital.
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