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Arma Partners continues to deliver landmark deals in the face of challenging market conditions

January 09, 2024

Read time: 5 min

Despite adverse headwinds in the first 9 months of its financial year (due to end on 31 March 2024), Arma remains on track to deliver another strong year. In calendar year 2023, Arma advised on 17 M&A deals valued at more than $33bn and raised fresh funding for high-growth clients across 6 growth capital transactions. We also entered into a strategic agreement with Mediobanca, which will turbocharge Arma in pursuing new strategic goals and enhancing our global reach, while maintaining operational independence and sector focus. We are delighted with the first 3 months of partnership with Mediobanca, which have exceeded our expectations and augur well for the future.

Our Software practice has continued to see strong deal activity, underpinned by the resilience of the software sector and Arma’s proven ability to navigate challenging market conditions. Appetite for businesses differentiated by robust downside protection and sticky customer bases has remained strong, and particularly evident in vertical market software and ERP, where Arma has advised on the sale of Warburg Pincus-backed Once For All, a European leader in supply chain risk management software, to GTCR; the sale of AKKR-backed Kerridge Commercial Systems to CapVest, valued at over $1bn; and the sale of Partners Group portfolio company Civica to Blackstone, valued at more than $2bn. Arma concluded the year advising on two landmark transactions in European software: the recapitalisation of IRIS Software by Leonard Green & Partners, valuing the business at $4bn; and substantial further investment led by Hg in Visma, now the largest privately-owned software business in Europe, valued at $21bn. In the public market arena, Arma advised GK Software on its public offer and subsequent sale to Fujitsu. We have also seen a number of strategic buyers capitalising on early-stage adoption of AI within enterprise software in an attempt to become frontrunners, as was evident in the Arma-led sale of Silverfin, a cloud-native provider of post-accounting software, to Visma.

In the Data and Information sector, the appeal of workflow criticality, resilience and strong cash conversion has sustained investor interest, with valuation multiples remaining strong for the highest quality businesses. This year, Arma has successfully advised Abry Partners on their acquisition of Chambers and Partners; on the sale of Infare to OAG; and on AgriBriefing’s acquisition by Mintec. In marketplaces, there has been a resurgence in interest from market leaders in real estate, automotive and general classifieds, as well as adjacent marketplaces such as finance, and we expect these marketplaces to continue evolving towards transactional venues; as a case in point, Arma acted as exclusive financial adviser to Evolution Funding, a portfolio company of LDC, on its sale to Carlyle.

Digital transformation remains an imperative for every kind of business, and leading cloud businesses fundamental to this transformation have continued to transact in the face of softer public valuations, illustrated by our successful completion of Marlin Equity Partners’ majority investment in Cloud Technology Solutions Group. Expansion of capabilities has and will continue to drive M&A activity at all levels of the market and across a range of cloud verticals, including pure-play cloud specialists, Global System Integrators and, increasingly, value-added resellers. In this sector, Arma also advised Sapphire, a leading provider of digital operations services, on its sale to NTT DATA.

This year has been a challenging year for the FinTech ecosystem, as focus shifted from revenue growth to cost containment, financial institutions reviewed their IT budgets, sales cycles lengthened, and the regulatory environment continued to tighten. However, in the medium-term the sector remains very attractive to both Private Equity investors and strategic buyers, given the size of the addressable market, the need for consolidation, the quality of the underlying business models and the mission-critical nature of the solutions provided. This year, Arma advised Macrobond, a fast-growing technology and data platform backed by Nordic Capital, on its sale to Francisco Partners. During Q4, we saw an increase in both M&A and financing activity as confidence began to return, a trend that we expect to continue into 2024.

The business landscape is becoming increasingly complex, particularly for the Digital Economy, as the rate of digital transition accelerates further. The growing significance of ESG, coupled with major attitude shifts towards energy transition and the adoption of AI, place even the most established tech firms under investor scrutiny. Businesses that can demonstrate stability and resilience, whilst being ready to seize opportunities presented by these ongoing shifts, will be well-placed to attract investor interest. That will be crucial in an environment where the recent rebound in equity markets, prospect of a ‘soft landing’ for major economies, and widely expected softening in interest rates bodes well for a recovery in M&A and fundraising markets.

Undeterred by one of the most challenging market environments in recent years, Arma is poised, yet again, to finish its financial year to March 31st in a very strong position. We remain incredibly grateful to our clients for their ongoing trust, and to our team members for their dedication.Our ability to make deals happen in difficult markets sets Arma apart, allowing us to capture an outsized market share over the past 12 months, and confirming our position as Europe’s preeminent adviser to the Digital Economy.

Find out more about the deals on which we have advised in 2023, as well as our previous transactions, here.

We wish you a happy and successful new year.