The climate for mergers remains slow, but some private equity funds are still finding ways to do deals. That includes Luminate Capital Partners, the technology-focused fund from Hollie Haynes, which has just acquired AbsenceSoft.
The transaction closed last week, Fortune has learned. Founded in 2013, AbscenceSoft provides software that helps its more than 300 customers manage leaves, like maternal and paternity, as well as accommodations. Financial terms were not announced.
Norwest acquired a majority of AbsenceSoft in 2021 from Bow River, and now both will exit the operation entirely.
That 2021 investment came from Norwest’s 15th fund, which raised $2 billion in 2019. (Norwest is currently on its 17th pool that collected $3 billion earlier this year, Fortune has reported.) Norwest tapped Raymond James to run a brief process over the summer for AbsenceSoft which attracted multiple parties before it settled on Luminate, said Ran Ding, a Norwest general partner.
Luminate has “very differentiated perspectives on software which is why we had good chemistry from the beginning,” Ding said.
Haynes is well-known in the PE world. The executive spent 15 years at Silver Lake, the tech-focused private equity firm. In 2007, Haynes helped launch Silver Lake Sumeru, the firm’s middle market private equity fund that invested in i2 (sold to IBM), Blackline Systems (IPO in 2016) and Talend (IPO in 2016). Haynes left Silver Lake at the end of 2014 and founded Luminate the next year. Some Silver Lake founders invested in the firm’s first fund, which raised $265 million in 2017.
“She has an amazing track record,” Norwest’s Ding said of Haynes.
A Deal Slowdown
Luminate is a growth buyout firm, meaning it buys control of growing companies. The San Francisco firm focuses on software businesses, typically investing between $75 million to $400 million per deal. AbsenceSoft is Luminate’s first transaction this year. The PE firm sold Quantivate to Ncontracts in December. (Earlier this month, Hg bought Ncontracts.)
AscenceSoft is also the first acquisition from Luminate’s upcoming fourth fund, which is targeting $1.5 billion, according to a regulatory filing. Marketing for Fund IV began earlier this year, and the pool has already raised $800 million, a person familiar with the situation said. (Luminate’s third fund, which collected $1 billion in 2021, is also investing in AbsenceSoft.) Haynes, Luminates founder and managing director, declined to comment on the fundraising.
The AbsenceSoft deal comes amid a sluggish summer for U.S. mergers. As of Aug. 8, the number of deals this year dropped 13% to 6,245 transactions with a total value of $966.5 billion—but still represented a 24% increase from the announced deal totals during the same time period in 2023. Private equity transactions reflect the same trend. The number of U.S. PE mergers was down 10% while deal value, $291.9 billion, was up 9% versus 2023.
Fundraising has also crawled this year. Through the first half of 2024, PE and VC firms globally raised $365.75 billion in new capital, Institutional Investor reported in July, citing data from S&P Global Market Intelligence and Preqin. This pace means that the total amount raised by PE and VC will likely fall short of the $919.27 billion raised in 2023.
Many think the Federal Reserve will cut interest rates on Wednesday, which could provide a boost to M&A. Mergers so far in 2024 are “better than last year” but Haynes doesn’t think much will change if there is a rate cut. There is a lot of noise and confusion in the market right now, Haynes said.
“Every public company’s growth rate is down. The hard part for the owner of businesses is that forecasting is tough—whose growth rate will rebound, who will not, who is impacted by A.I,” said Haynes.
A.I. is a big deal, she said. Companies that “can introduce new products and new functionality and take advantage of changes will really benefit. It’s unclear who can execute and who can’t, [and] who doesn’t try,” Haynes said.
