In Their Own Words: Corporate Finance
Each year, WSJ Pro Private Equity and sister publication Private Equity Analyst ask members of the private-equity community to share their reflections on the past year and projections for the year ahead.
Managing Partner, THOMA BRAVO
What surprised you the most in 2016?
What was most surprising to me in 2016 was both the number of high-quality software assets coming to market and how quickly valuations went up throughout the year. Large deals in particular were highly contested by private equity, driving prices to an unprecedented level.
What do you think will be the biggest challenge your corner of the industry will face in 2017?
Software has been an expensive sector for investors for many years now. In this high-valuation environment, software companies that underperform against expectations will be under significant pressure. This is particularly true for publicly traded companies with short term-focused investors.
What are your thoughts on the volume of take-private deals in the year to come?
We are entering a new phase of buyouts in software, and private equity has never been more popular. Many public software companies will need to transition their business models from the traditional, on-premise approach to software as a service. Partnering with private equity and managing that disruptive business shift as a private company will continue to be appealing to management teams, and we expect the take-private deal volume to increase considerably.