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has been busy year in private equity, innumerable big money purchases opened. The private sector has seen some significant transactions led by private equity firms more than ten billion-dollar deals for state-owned technology companies.
Headquartered in London Permira He was the main hero who joined Blackstone to get For European online classifieds group Adevinta 13 billion dollarsand by taking the popular website building platform in October Squarespace private a A deal worth $7.2 billion.
Permira is not only interested in billion-dollar acquisitions. In addition closure Last year, the company raised 16.7 billion euros in new buyout funds has separate funds which takes the minority and majority stakes in early-stage, high-growth companies. His first such investment was in Sweden Klarna returned in 2017only one fintech giant is now preparing for an IPO eight years later.
“We are still investing in Klarna,” Permira’s new co-managing partner and CEO Brian Ruder confirmed to TechCrunch. “Generally speaking, with these minority growth strategies, you don’t control the exit, and that’s why we accept being in these companies for the long haul. But we should be in these companies for a long time.”
As we approach the end of 2024, TechCrunch caught up with Ruder to discuss some of these newer deals, as well as Permira’s broader approach to the tech sector, AI, and having two people at the top sharing power equally.
Two by two
While many organizations are embracing new leadership models, including co-leadership, the idea has long been popular within Permira. Indeed, Kurt Björklund He managed together with Permira Tom Lister It starts in 2008. Lister stepped aside In 2021, he left Permira with just one person at the helm – an unusual position for a company that has adopted a co-led strategy across most of its investment teams, including technology, services, consumer and climate. single leader.
“We really like the solidarity model – partly to address the loneliness of being a leader. It really helps to have a co-creator,” Ruder said. “The key to any leadership role is the speed of good decision-making, and the faster you can make really good decisions, the better off you’ll be. “If I can’t think together, I’ll be slower to come to the same conclusion.”
Both Ruder and Deepan Patel landing in the co-driver’s seat On September 1and after Björklund became executive chairman, normalcy returned. But of particular note, in addition to being co-managing partners, Ruder and Patel also achieved CEO status—a new title at Permira. Was this a sign that the role was changing, or perhaps a sign that the titles of industry leaders were seeping into private equity? The truth, though practical, is somewhat more mundane. This is to clarify who it really is actually managing things.
“The title ‘managing partner’ has been dropped at many other firms,” Ruder said. “There’s basically an inflation of that title in the industry. We have companies in our peer group that have managing partners on many of their pages.”
“Digital Spine”
When TechCrunch He spoke with Ruder in 2017the main focus of the conversation was the increasing involvement of private capital in the technology sector. It was from behind a strip of high-profile private deals. In the intervening years, Permira itself acquired a number of public technology firms in multibillion-dollar transactions. This includes Permira email security company Mimecast It was bought for 5.8 billion dollars In 2022, and customer communication platform Zendesk went private the same year With a $10.2 billion contract Managed by Permira and Hellman & Friedman.
Fast forward to today, and Permira says its funds have invested $28 billion in 80 SaaS and all-encompassing technology companies over the years. cyber securityto fintech and online markets. The company is also now led by Ruder, who led the company’s technology investment team since 2008, and Patel, who was on Permira’s technology team from 2009 to 2018 before moving to the consumer side.
So is Permira really about technology?
“We’ve always been a growth-focused, growth-to-scale, private equity firm,” Ruder said. “It’s not just tech, but technology – and I mean digital as a whole – is a dominant part of this whole market, and of course we’ve been very tech-centric over the 40-year history of the firm. The way we express it is that we have this core digital highway that runs through all of our strategies.”
So while Permira separates its investment strategies by vertical, “every company is a software company” mantra, while cliché, rings truer than ever.
Take a luxury shoe brand Golden GooseWhat he got for Permira 1.3 billion dollars in 2020. You wouldn’t call it a “tech company” per se, but technology is at the heart of how it operates. As part of its push to rely less on multi-brand retailers, its pursuit of direct-to-consumer (D2C) strategies is paying dividends for the company. attributed a sales boost to this new D2C approach.
“A lot of what Golden Goose has done with them in our investment cycle is online,” Ruder said. “So even for businesses that we don’t think of as ‘tech’ businesses, tapping into online avenues and channels is a big part of what we do across the board.”
Permira’s largest private technology deal in 2024 is another example, and it involves a company most people probably haven’t heard of. Adevinta, a Norwegian media group Schibsted turned around Controls in 2019 with them The number of online marketplaces in Europe and America – and then a growing number It bought eBay’s classifieds business for $9.2 billion in 2020. There is little question that Adevinta is an operator of digital brands, but how such consumer brands acquire new users requires a different expertise than, for example, deep enterprise technology.
“It’s a collection of some of the best classified assets,” Ruder said. “And the plan is to be very focused on managing the individual classification businesses in the best way possible for the geography and vertical. I’ve built a management team that can do that, and I’m very pleased with the quality of the team we’ve been able to build with that in mind. These are long-term, very high double-digit growth markets.”
AI with everything
Of course, Permira is also heavily focused on artificial intelligence, but it’s unlikely to invest in some pre-IPO giants like OpenAI or Anthropic. Instead, it focuses on how AI is applied in its portfolio and learned from it.
An example was Zendesk already covers AI Permira & Co. before it was taken private two years ago, but the rise in generative AI really gave Zendesk a boost takes action. Earlier this year Zendesk has acquired Ultimate to bring AI agents into the mix. This also obtained Klaus, an AI-powered quality assurance (QA) startup. The company has replaced many top executives, including co-founder and CEO Mikkel Svane. Tom Eggemeier in 2022. Since then, there has been Zendesk appointed a new one CIO and CFOand a new head engineering and AI, Shashi Upadhyayjoined from Google this month.
“With Zendesk, we’ve truly lent a hand to the world of generative AI” Ryan LanpherA Zendesk board member and Permira’s new technology co-chair told TechCrunch. “We are seeing great acceptance from our customer base. Zendesk’s traditional customer base was already digital natives and early adopters. We think Zendesk is one of the fastest growing AI businesses right now.”
It is impossible to talk about artificial intelligence without mentioning cloud computing, two highly synergistic and complementary domains. Just as cloud computing powers software, enabling new business models with higher scale and margins, Ruder believes artificial intelligence will create a similar tailwind.
“We think artificial intelligence will be another step function like that,” Ruder said, adding that it will require companies to embrace the cloud more fully.
“In all industries, we see CEOs asking their CIOs what they are. We’re dealing with artificial intelligence,” Ruder continued. “And the response from these CIOs more and more is that they want to do a lot with AI, but their infrastructure isn’t ready to use it all yet. We think there’s really a lot of opportunity and pressure for a significant upgrade wave to move the persistent install base of on-premise software to the cloud, modernizing the data infrastructure and architecture to enable AI in a way that hasn’t happened in previous waves. .”
A square deal
As with Zendesk, website builder Squarespace had already launched Embrace AI Before calling Permira, it recently introduced a new set of artificial intelligence tools called “.design intelligence.”
Permira first announced its plans Get Squarespace in May An enterprise valuation of $6.9 billion. Soon a consulting firm is recommended Squarespace shareholders reject the offer, especially since Squarespace’s financials were up and its outlook strong. In the end, Permira had to raise its bid to about $7.2 billion.
About 18 months ago, Squarespace’s market value was about half that Permira could have missed out on a deal. But that doesn’t even work with large, publicly traded businesses like this one.
“The time has to be right for us and for the company to do a transaction on the scale of Squarepace,” Ruder said. “Especially for public companies — you can’t buy those companies at a low price because it’s very difficult to get boards to do transactions there. And rightly so – unless the company is in trouble, it doesn’t make much sense to want to sell these boards. And the quality businesses we invest in are rarely in trouble.”
The original founder and CEO of Squarespace, Anthony Casalenabut also stands firmly in place. For a company that’s been around for nearly 20 years and is coming back to the public market, it seems unusual that a private equity firm wouldn’t want to shake things up at the top. But Ruder points out that while some private equity firms try to rescue troubled companies, they focus on acquiring fundamentally sound “quality assets.” Thus, most of the investments he makes from the current buyout fund involve the founder in some way.
“Our strategy is to find the best product in really good markets and support that,” Ruder said. “At our scale, the vast majority of private equity is for maximization EBITDA margins in the near term, but we believe we can generate a better return to consolidation strength on the back of a larger overall economy. And this approach is very attractive to people who care about where their business is going. And for this reason, we are attracted to the situations where our founders are.”
