Silver Lake to sell Serena Software to HGGC Capital for about $450M after paying $1.2B in 2006
HGGC to Buy Serena Software From Silver Lake — After eight years, Serena Software has found a new home. — HGGC Capital, an investment firm, plans to announce on Monday that it has bought …
Context & Ripple Effects
Serena Software's story is a full round trip for the 2006 buyout wave: Silver Lake took the enterprise application vendor private for $1.2 billion at the peak of that era's software LBO activity, held it through eight years of ownership, and is now handing it to HGGC Capital for about $450 million — roughly a third of its entry price.
The deal drew same-day pickup from trade outlets including ITworld and bizjournals, but the notable fact is the arithmetic: this is one of the marquee 2006-vintage software take-privates exiting at a deep discount, which matters for how sponsors and their limited partners now underwrite legacy application-software deals.
First-order effects
- HGGC Capital acquires Serena at roughly one-third of Silver Lake's 2006 entry price, closing out an eight-year hold that ranks among the loss-making exits from the pre-crisis software buyout cohort.
- Silver Lake frees capital tied up in Serena since 2006, converting an unrealized drag into a booked loss it can put behind it.
Second-order effects
- Mid-market sponsors such as HGGC become the natural buyers of assets the large 2006-vintage funds are shedding at discounts, resetting price expectations for comparable legacy application-software companies still held by that generation of deals.
- Limited partners in Silver Lake's 2006-era vehicles see the markdown flow through to realized returns, sharpening scrutiny of how software LBOs from that period were priced at entry.
Third-order effects
- If other 2006-vintage take-privates of application vendors also clear well below entry, the next fundraising cycle should price legacy software buyouts more conservatively — smaller checks, lower leverage, and shorter planned holds.
The trend: The 2006 wave of billion-dollar software take-privates is unwinding through sales to mid-market sponsors at steep discounts to entry, marking down the leveraged-buyout playbook for legacy application vendors.