Report: Tech firms accounted for 46% of US private-equity buyouts so far this year, the sector's highest level since at least 1995
Matt Jarzemsky / Wall Street Journal : Tweets: @permiranews , @its_arun_ , @dimitrisirota and @skupor Tweets: Permira / @permiranews : .@WSJ discusses private equity's “new favorite industry: tech”, highlighting the $5.3bn purchase of Informaticahttp://on.wsj.com/ 2986U3E Arun Singh / @its_arun_ : Less of a crush than a soulmate, imo, given the recurring cash flows & stability of B2B software companieshttp://www.wsj.com/articles/ private-equity-has-a-crush-on-tech- 1467308434 ... Dimitri Sirota / @dimitrisirota : Private Equity's Growing Interest in Tech Suggests Far From Being Overvalued, Many Companies Are Undervaluedhttp://on.wsj.com/ 29bLi5W Scott Kupor / @skupor : Tech accounts for 46% of 2016 buyout activity vs 11% in 2012http://www.wsj.com/articles/ private-equity-has-a-crush-on-tech- 1467308434 ...
Context & Ripple Effects
The WSJ report pegs tech at 46% of US private-equity buyouts year-to-date, the sector's highest share since at least 1995, with Permira's roughly $5.3bn purchase of Informatica as the emblematic deal — the thesis being that B2B software's recurring cash flows make it ideal LBO collateral. What follows in the related coverage reads as that thesis compounding: Vista Equity Partners and Thoma Bravo each moving to raise $10B-plus funds two years later, then Thoma Bravo scaling to a $35B tech-buyout vehicle after absorbing RealPage and Proofpoint in 2021.
The throughline is that PE's tech share has become a tracked macro series rather than a one-off: by late 2024, PitchBook had tech at 28.3% of total PE deal value in Q3, up from 18.7% the prior quarter, as startups and VCs turned to buyout firms for liquidity. This 2016 report is the early marker on that curve.
First-order effects
- Software vendors like Informatica gain a credible exit path outside the public markets, with buyers paying on the strength of subscription revenue rather than growth multiples.
- Permira and its limited partners take direct exposure to enterprise software economics, validating the 'new favorite industry' framing for competing buyout shops.
Second-order effects
- Rival tech-focused firms respond by scaling fund size — Vista and Thoma Bravo's $10B-plus raises, and eventually Thoma Bravo's $35B vehicle with RealPage- and Proofpoint-scale deals — because the target pool is the same recurring-revenue software base.
- A strong tech IPO window cuts both ways: Dealogic counted ~$12.2B raised across 28 US tech IPOs in just the first half of 2018, meaning buyout firms must outbid public-market valuations for the same assets.
Third-order effects
- If the pattern holds, the line between venture and buyout capital erodes — Bessemer's 2022 raise included a dedicated $780M buyout fund alongside its startup vehicles — leaving software ownership concentrated across whichever checkbook prices it cheapest.
- With technology already near 40% of the S&P 500 per the related coverage, PE portfolios increasingly mirror public-market tech concentration, making leveraged bets on software a systemic feature of both private and public markets rather than a niche strategy.
The trend: Private equity is structurally repositioning around recurring-revenue software, with each cycle of record tech deal share funding larger successor vehicles aimed at the same asset class.