ParkerGale recently applied its technology investment focus close to home, acquiring CultureIQ, a provider of software that surveys employee engagement and culture. The Chicago-based private equity firm had used the software with its portfolio companies for several years and was impressed. ParkerGale also backed CultureIQ’s acquisition of the workforce surveys and analytics (WS&A) division of Corporate Executive Board, a subsidiary of information technology research firm Gartner (NYSE: IT).
ParkerGale takes majority, control ownership positions in North American technology companies with at least $2 million in annual profits. The PE firm started in 2014, closing its debut fund in 2016 at $240 million. Recently ParkerGale was recognized as one of the “10 young and thriving firms worth watching” by Mergers & Acquisitions.
ParkerGale describes its approach with portfolio companies as a three-prong focus: on teams and systems, products and development, and sales and marketing. That includes helping its companies with improving and upgrading systems, developing new management team skills, building software products, scaling technology infrastructure, tracking key metrics for growth in financial reports and establishing scalable sales and marketing.
The firm’s portfolio includes: Aircraft Technical Publishers, OnePlus Systems, Ipro Tech LLC, Profisee, WorkWave, The Tie Bar and 2Checkout. The investment team includes co-founders and partners Kristina Heinze, who is one of Mergers & Acquisition’s Most Influential Women in Mid-Market M&A; Devin Mathews; Jim Milbery; and Ryan Milligan.
We asked ParkerGale partner Devin Mathews about the CultureIQ/Corporate Executive Board deal, market trends and the firm’s podcast.
How do CultureIQ and WS&A exemplify ParkerGale’s investment theme?
The opportunity fit well for a couple reasons. First, our fund pursues corporate carve-outs and buyouts of founder-owned technology companies as a broad investment thesis. This one was a bit of both – CultureIQ was owned by its founder, Greg Besner, while the WS&A division of CEB was a carve-out from a large corporate owner. Second, we have used CultureIQ’s products across our portfolio for several years, so we knew firsthand how critical the company was to driving employee engagement and improving corporate cultures.
What is driving investment in technology?
Companies across all industry sectors are adopting technology to drive growth and create operating efficiency. More strategic buyers and private equity funds are tapping into this broad secular trend by buying and backing software companies. We are a small, focused, patient and operationally-driven buyer. While the general market is competitive and over-heated from a valuation perspective, we stick to small, not-so-obvious investments where our long history of buying and transforming small software companies keeps us away from paying up for or chasing shiny objects.
How is ParkerGale using the weekly Private Equity FunCast to enhance deal flow?
We’ve been doing it for almost five years and we are averaging 20,000 listeners a month. We use the podcast to help founders and management teams at technology companies learn more about private equity and how our business works. It has helped build our brand as an experienced but approachable buyer. We take our work very seriously, but we don’t take ourselves seriously at all. If you listen to the podcast, we think that balance comes across pretty well.