Thoma Bravo Advantage, a blank check company formed by private equity firm Thoma Bravo, has completed an IPO (initial public offering), and is now seeking to acquire merge, acquire or combine with one or more software businesses.
Thoma Bravo Advantage (NYSE symbol: $TBA) is a SPAC (special purpose acquisition company). A SPAC is designed to raise funds in an initial public offering (IPO) with the aim of acquiring a private company. That private company then becomes public as result of the merger, Reuters notes.
Thoma Bravo Advantage: SPAC Software Strategy Hints
So what is Thoma Bravo Advantage potentially up to in the SPAC market? In early December 2020, The New York Post put it this way:
"Chicago-based Thoma Bravo’s usual approach to investing is to acquire controlling stakes in companies through leveraged buyouts instead of taking minority positions. By raising a blank-check company, it can buy a minority stake in a promising tech firm and help it go public, the source said."
A December 2020 SEC filing indicates that Thoma Bravo Advantage is looking to acquire a privately held software company that has a strong management team, reasonable valuation, predictable recurring revenues and products that compete in a highly fragmented market segment.
A January 2021 SEC filing indicated that Thoma Bravo Advantage is casting a wide net before making a potential M&A move. The filing stated:
"Public sources indicate that there are currently approximately 990 software companies with post-money valuations of $1 billion or above, which we believe represents a sizeable pipeline for our effort."
Still, Thoma Bravo Advantage's specific software target remains a point of discussion. An SEC filing indicated:
"We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us."
Thoma Bravo: Background and Potential Next Moves
Meanwhile, recent chatter in the private equity market indicates that software-focused PE firms are investigating the cloud distribution, Unified Communications as a Service (UCaaS) and MSP software markets, according to ChannelE2E's grapevine connections. Also of note: Kaseya has been exploring a potential IPO, and SolarWinds has been preparing a potential spin-out of its SolarWinds MSP business.
Here's some more info about the pros and cons of SPAC investments, according to Protiviti, a global consulting firm that helps companies solve problems in finance, technology, operations, governance, risk and internal audit.
Originally posted December 5, 2020. Updated multiple times thereafter with various Thoma Bravo Advantage business milestones.