Sumeru earns Private Equity Seller of the Year for its exit strategy
Spun out from Silver Lake in 2015, Sumeru Equity Partners quickly established itself as a significant presence in the lower middle market technology buyout space. In 2019, the firm successfully exited five enterprise software investments and filed for an initial public offering of one of its portfolio companies.
Overall, the firm had a great year. Sumeru grew its employee base by 20 percent in 2019 and as a result moved into larger office space in Silicon Valley. The firm also began investing out of its latest fund, Sumeru Equity Partners III, which is not closed yet, and had a $600 million target. The firm closed on two new deals in 2019.
In March 2019, Sumeru sold shares in enterprise SaaS company Blackline Systems (Nasdaq: BL). Sumeru acquired a control stake in Blackline from its founders in 2013, took the company public in October 2016 at $17 per share and sold its final shares in March 2019 at $48.50 per share. Under Sumeru’s direction, Blackline tripled its sale capacity, establishing strategic partnerships with ERP software vendors, including major accounting firms, and brought on the form CFO of Salesforce.com as a board member to help build a strong finance function. A month prior to its IPO, Blackline acquired its European competitor, Runbook for $34 million and then in 2018, Backline reached an agreement with SAP for SAP to offer Blackline’s cloud-based finance and accounting solutions to its clients. Between Sumeru’s initial investment and the IPO, Blackline’s revenues grew at nearly 50 percent CAGR. Over the same time period headcount at Blackline grew threefold. Today, Blackline provides software for more than 2,200 companies.
While the public market can be a good place for tech-focused private equity firms to cash out, Sumeru diversified its exit strategies in 2019 and March 2019, Sumeru sold Foreflight to Boeing for an undisclosed amount. Sumeru invested in the company in 2014. ForeFlight is a Texas-based provider of flight planning and navigation software for pilots, flight operations, government, military and airlines. It was the first company to offer iPhone and iPad solutions for pilots. The technology drove the migration in the cockpit from paper charts and maps to an all-digital solution that has been credited with improving the efficiency and safety of flight operations. Under Sumeru’s direct, ForeFlight had partnered with Boeing for the two years leading up to the sale to bring aviators Jeppesen’s aeronautical data and charts through ForeFlights mobile platforms. During Sumeru’s investment period, ForeFlight tripled its investment in research and development, introduced new products and increased sales significantly.
At the very end of 2019, Sumeru sold SaaS Buildium to RealPage (Nasdaq: RP) for $580 million in cash. Sumeru acquired a control stake in Buildium from its founders in 2016. Buildium is a leading property management solution that also helps real estate portfolio managers easily find new business from property owners and community associations seeking services. Founded in 2004, Buildium services over 17,000 customers in more than 50 countries, totaling approximately 2 million residential units under management. The company had an expected revenue run-rate of approximately $60 million at the end of 2019, representing over 30 percent year-over-year growth.
To see all the award winners, check out Meet the winners of Mergers & Acquisitions’ M&A Mid-Market Awards.