Thoma Bravo Hits Home Run With Adenza Deal

The pace of tech news is picking up—and not just because antitrust regulators in both Europe and the U.S. are busy filing new lawsuits against big tech companies. And it has little to do with the fact that Twitter is once again communicating with the news media using something other than a poop emoji. No, today’s significant tech news development was the return of overpriced acquisitions. After a deal drought so severe it sparked layoffs in investment banking, none other than the operator of the Nasdaq stock market decided to rev things up. The Nasdaq company unveiled plans to buy financial software firm Adenza from Thoma Bravo for a whopping $10.5 billion. Coming on the same day that the S&P 500 closed at its highest point in a year, according to The Wall Street Journal, it almost feels like happy days are here again!

That’s certainly true for Thoma Bravo. For the private equity firm, the Adenza deal is what bankers might scientifically call a home run. The price, to be paid roughly half in cash and half in stock, is nearly double what Thoma Bravo paid for the two businesses that make up Adenza, based on reports about those deals. And it’s the equivalent of 18 times this year’s Adenza’s expected 2023 revenues—a massive premium over the average forward sales multiple of 6.3 at which enterprise software stocks are currently trading,  according to data from Koyfin. While we don’t know what multiple Thoma Bravo paid for the Adenza pieces—Calypso and AxiomSL—we do know that the private equity firm paid an average of 8.9 times forward revenue in 10 enterprise software acquisitions it announced between late 2020 and late 2022, according to data from Qatalyst Partners filed with the Securities and Exchange Commission for Thoma Bravo’s purchase of Coupa Software last year.