Who says there isn’t a lot of money in software meant to help people? Private equity firm Apax Funds announced this morning that it is combining three social impact firms to create a platform of sorts in a deal valued at $ 2 billion.
To build this giant of social good, Apax went out and bought EveryAction from Insight Partners and Social solutions from Vista Equity Partners, two companies we usually see involved in SaaS agreements.
The plan is to combine the two companies with CyberGrants, a company that Apax acquired in June. With EveryAction, businesses get a customer engagement platform focused on the needs of nonprofits. Rather than trying to get people to buy more, the goal would be to increase donor engagement. Social Solutions is a tool for collecting data about an organization’s activities and leveraging that data to coordinate service delivery and measure how well it is doing with its service objectives.
Finally, CyberGrants is a corporate responsibility platform designed to help companies create programs for employees to volunteer in the community and “maximize the impact of corporate philanthropy.”
Erin Mulligan Nelson, CEO of Social Solutions, sees the combination of the three companies as a way to accelerate their individual efforts as companies. “Joining forces will enable human services agencies in the public and nonprofit sectors to take full advantage of digital transformation opportunities. Our expanded offerings and opportunities for product innovation will create real value for our customers, improve outcomes for the people they serve, and help them accelerate lasting social change, ”he said in a statement.
While all three companies have a common theme of using software to help clients operate more efficiently in a context of social impact, bringing three disparate companies together on a single platform could prove challenging, even if the new company surely it will have numbers in its favor.
Apax reports that the combined companies will generate $ 200 million in revenue, involving 650,000 nonprofits and half the Fortune 500, while coordinating an impressive 38 million donors and volunteers. That is certainly scale.
PE companies tend to seek deals in undervalued companies that they can build and find lost value, and if that involves software intended to aid charitable endeavors, so be it. The fact that Apax bought these companies from other private equity companies suggests that this is an area these companies are looking at.
Of the three companies involved, only Social Solutions raised venture capital, according to Crunchbase data, raising $ 70 million, including a $ 59 million investment from former Microsoft CEO Steve Ballmer in 2018. As is often the case with PE agreements, these three companies are a bit older. , with EveryAction founded in 1997, CyberGrants in 1999 and Social Solutions in 2006. Perhaps they could use modernization or could benefit from additional investment from a company like Apax, which hopes that by combining these three companies, it can be a force in this space. . .
Sometimes the bigger the better. Sometimes it is not. Time will tell if Apax can pull it off. The deal will be subject to normal closing conditions and is expected to close sometime this quarter.