Compuware and Dynatrace have undergone a spectacular transformation
In 2014, Thoma Bravo completed its $2.2 billion acquisition of Compuware, a company specializing in mainframe software. At first glance, Compuware was perceived as an aging company operating in a declining sector. However, Orlando Bravo and his team spotted a hidden gem within the company: Dynatrace, an innovative solution for managing cloud environments.
Value creation :
After the buyout, Thoma Bravo split the company into two separate entities:
- Compuware: the traditional mainframe part, which was sold to KKR.
- Dynatrace: a key technological asset, positioned in the fast-growing market of cloud infrastructure management.
At the time of its acquisition, Dynatrace was not profitable and faced a number of operational challenges. Thanks to Thoma Bravo's efforts, the company saw EBITDA margins exceed 30%, while posting rapid sales growth.
Dynatrace was subsequently floated on the stock exchange, becoming one of the most successful companies in Thoma Bravo's portfolio. Today, Dynatrace is a major player in the cloud software sector, with a valuation exceeding initial expectations.
Why is this deal a success?
Orlando Bravo stresses the importance of long-term relationships with companies. Dynatrace was identified by Thoma Bravo as early as the late 1990s. By cultivating this relationship over several decades, the firm was able to seize the opportunity to invest at the right time.
Axiom/Calypso: a strategic sale to Nasdaq
The second major transaction involved Axiom, a New York-based company specializing in regulatory process management for banks. This initial acquisition was followed by the purchase of Calypso, a European company offering similar services to investment banks.
The merger of the two companies has enabled Thoma Bravo to create Adenza, a unique platform covering all the regulatory needs of financial institutions worldwide.
Value creation :
By combining the activities of Axiom and Calypso, Thoma Bravo has achieved significant synergies, boosting both revenues and margins. The integration has enabled us to offer a complete and coherent range of services to banks, a sector increasingly subject to complex regulatory requirements.
In 2023, Thoma Bravo sold Adenza to Nasdaq for approximately $11 billion. This transaction marked one of the largest sales of a technology company in the financial sector, underlining Thoma Bravo's ability to create value for its investors.
Why is this deal a success?
The success of this transaction hinges on several key elements:
- A proactive sourcing approach thanks to relationships developed with the founders.
- A buy-and-build strategy, combining several complementary assets.
- Rigorous execution of post-acquisition synergies, maximizing profits and growth opportunities.
Thoma Bravo methodology: a replicable model
Orlando Bravo insists that Thoma Bravo's methodology is consistent from transaction to transaction. Each acquisition follows a similar pattern:
1. proactive sourcing :
Thoma Bravo has dedicated teams for each target sector, including cybersecurity, infrastructure software and business applications. These teams monitor companies in the sector over the long term, developing relationships with executives and boards of directors.
2. asset quality :
The manager ensures that he only invests in companies with the potential to become market leaders. Thoma Bravo favors companies with recurring revenues and long-term growth potential.
3. value creation :
Every buyout project involves a significant operational transformation:
o Internal reorganization to improve profitability.
o Development of innovative products to attract new customers.
o Market consolidation through complementary acquisitions.
A unique ability to maximize transaction value
The Compuware/Dynatrace and Axiom/Calypso transactions are perfect examples of Thoma Bravo's ability to identify hidden opportunities, transform companies into industry leaders and achieve successful exits, whether through IPOs or sales to strategic buyers.
Thanks to its rigorous methodology, Thoma Bravo has proven that it can replicate this model across different sectors and company sizes. This proactive, long-term approach has made the manager one of the most successful in the private equity market, delivering remarkable returns to his investors.
As Orlando Bravo sums up: "Our process remains the same from one transaction to the next. We identify potential leaders, transform them and create value at every stage. That's our mission and our expertise."
