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Exact Holding is assessing bids received last week from several private equity houses and has at least one meeting next week, buyside sources said.
An industry banker familiar with the auction process said several bids were due last week and that the Netherlands-listed IT software company is now determining whether the prices are high enough to go to another round. This news service understands, however, that at least one meeting will take place next week and the total number of potential bidders is “around eight”.
The banker said Exact would be looking closely at the debt offered by bidders before deciding whether to move forward. He said there is still a “leverage market” in Europe, although it is not as solid as it used to be. The same source said most of the bidders were US private equity firms which have European offices.
A second source named Golden Gate Capital, which owns IT software firm Infor, as one of the bidders. GGC declined to comment.
A second banker familiar with the bidding process said if GGC could find synergies between Infor, which operates in the enterprise resource planning (ERP) market, and Exact, it would be in a strong bidding position. The second banker said this would justify GGC bidding higher than its competitors, as it would be able to combine a strategic rationale for buying Exact with the ability to raise debt and fund the deal using equity.
The banker said that other rumoured rival bidders which have software investments include HgCapital and Hellman and Friedman. He said the former “might” be able to find synergies with Exact and its current investments Addison Software and Visma. Hellman and Friedman was far less likely to find synergies between the target and Iris, which it bought from HgCapital last year, he said.
A private equity source, not involved in the deal, said bidders could probably currently raise around 4x EBITDA in senior debt and 1x EBITDA in mezzanine debt for a target such as Exact. The source stressed that “these businesses vary a lot in levels of recurring revenue and that would be a major influence on the debt levels available.”
It is understood that KKR managed to raise around 6.6x EBITDA in debt for its approach for Northgate Information Solutions last month.
An Exact spokesperson said Exact’s relationship with their clients is no different than those of comparable software companies. Exact sells licenses of their software products and offers additional deployment, maintenance and consultancy services, said the spokesperson.
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