Take-Private Deals Are on a Record Pace

Software companies have been fueling the growth of companies delisting in the wake of sell-offs in the public markets, according to Preqin.

Michael Nagle/Bloomberg

Michael Nagle/Bloomberg

As companies continue to trade at discount prices, more private equity firms are eyeing opportunities in the public markets.

The value of take-private deals announced or closed by buyout funds was $96 billion in the first half of 2022, according to a report from Preqin. Last year, the total value of such deals led by private equity firms reached a record of $118 billion, and according to the report, that figure will soon be surpassed by this year’s number.

Notable public-to-private deals in the first half of 2022 include Blackstone’s $7.6 billion acquisition of the real estate investment trust PS Business Parks; Apollo’s $7.1 billion acquisition of the automotive manufacturer Tenneco; and Clayton Dubilier & Rice’s $4 billion acquisition of animal health services company Covetrus. TPG also announced in June that it would acquire the healthcare technology company Convey Health Solutions for $1.1 billion.

The enthusiasm over take-private deals is largely fueled by the massive public market sell-offs in the technology industry, along with the large amount of dry powder held by private equity firms. In the past 18 months, information and technology companies have made up more than half of the take-private deal activity, up from one-third five years ago, according to the Preqin report. The low valuations in the tech sector dovetail with the record amount of undeployed capital that PE firms are sitting on.

The Preqin report added that private equity has developed “a distinct appetite” for software companies, particularly those with a software-as-a-business model. From January 2021 to July 2022, PE firms have deployed more than $100 billion just on take-private transactions involving software companies. The rest of the capital was mostly distributed to industries such as retail, cybersecurity, insurance, information services, and healthcare IT.


The interest in SaaS companies is justified by the growth potential in the sector. Take Anaplan, for example. The web-based enterprise platform agreed to a $9.7 billion take-private deal by Thomas Bravo in March. The firm’s revenue has grown 39 percent on an annual basis, according to Preqin. Zendesk, a San Francisco-based company that builds software to improve customer relationships, accepted a $10.2 billion take-private bid in June. Zendesk’s annual revenue growth is 31 percent, according to Preqin. The rapid rise of SaaS companies during the pandemic even drove the development of a new asset class called revenue-based financing.

“These enterprise deals showcase not the spread of undervaluation, but the [software] sector’s revenue growth and potential, [which] GPs seek to capitalize on,” the report said. It added that software companies are largely regarded as “future-proof,” prompting private equity to double down on such deals amid the market downturn.