Thoma Bravo explores $2 billion-plus sale of Foundation Software, sources say

• Foundation Software generates over $200 million in annual revenue and more than $100 million in EBITDA; Thoma Bravo acquired the company in 2020
• The sale is part of a broader trend of increased private equity software deal activity driven by improving financing markets and demand for profitable vertical software companies
• Thoma Bravo has been actively monetizing software investments, recently selling a majority stake in Command Alkon to Francisco Partners and selling Heavy Construction Systems Specialists to Nemetschek Group for over 2 billion euros

Summary

Transaction Details:

Thoma Bravo is pursuing a sale of Foundation Software that could exceed $2 billion in valuation. William Blair is advising on the process, which has attracted interest from both private equity firms and strategic buyers.

Company Profile:

Foundation Software, founded in 1985 and based in Strongsville, Ohio, provides accounting, payroll, project management, and field operations software targeting small- and mid-sized construction contractors. The company generates over $200 million in annual revenue and more than $100 million in EBITDA. Thoma Bravo acquired Foundation through a strategic growth investment in 2020.

Market Context:

The sale comes amid increasing private equity software deal activity, driven by improved financing markets and strong demand for profitable vertical software companies. This has encouraged financial sponsors to pursue exits.

Thoma Bravo's Recent Activity:

The private equity firm has been actively monetizing its construction software portfolio. In August 2023, Thoma Bravo sold a majority stake in Command Alkon, another construction materials software provider, to Francisco Partners. Earlier in the year, it agreed to divest Heavy Construction Systems Specialists to Germany's Nemetschek Group for over €2 billion.

Investment Implications:

The transaction signals continued consolidation in the vertical software sector, particularly within construction technology. The strong valuation multiples being achieved in this space reflect investor appetite for specialized software businesses with recurring revenue models serving niche industries. The robust exit environment suggests private equity firms are capitalizing on favorable market conditions to realize returns on software investments.