Apax to combine three social impact software companies in deal valued at $2B
Who says there is no big money in software aimed at helping 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 social good juggernaut, Apax went out and purchased EveryAction from Insight Partners and Social Solutions from Vista Equity Partners, two firms we often see involved in SaaS deals.
The plan is to combine the two firms with CyberGrants, a company that Apax acquired in June. With EveryAction, companies get a customer engagement platform focused on the needs of nonprofits. Instead of trying to get people to buy more stuff, the goal would be to increase engagement with donors. Social Solutions is a tool for gathering data on an organization's activities and taking advantage of that data to coordinate service delivery and measure how well you are doing with your service goals.
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."
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Erin Mulligan Nelson, CEO of Social Solutions sees combining the three companies as a way to accelerate their individual efforts as companies. Joining forces will empower human services agencies in both the non-profit and public sectors to fully capitalize on the opportunities for digital transformation. Our expanded offerings and opportunities for product innovation will create real value for our clients, improve outcomes for the people they serve, and help them accelerate lasting social change," she said in a statement.
While the three companies have a common theme of using software to help customers operate more efficiently in a social impact context, putting together three disparate companies into a single platform could prove challenging, even if the new company will surely have numbers in its favor.
Apax reports the combined companies will generate $200 million in revenue, involving 650,000 non-profits and half the Fortune 500, while coordinating an impressive 38 million donors and volunteers. That is certainly scale.
PE firms tend to be looking for deals in undervalued companies that they can build up and find missing value, and if that involves software aimed at helping charitable efforts, so be it. The fact that Apax bought these companies from other PE firms suggests that this is an area that these companies are watching.
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 deals, these three companies are a bit older, with EveryAction founded in 1997, CyberGrants in 1999, and Social Solutions in 2006. Perhaps they could use modernizing or could benefit from additional investment from a company like Apax, which hopes by combining these three companies, it can be a force in this space.
Sometimes bigger is better. Sometimes it's not. Time will tell if Apax can pull this off. The deal will be subject to normal closing conditions and is expected to close some time this quarter.
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