Blockbuster deals may be few and far between, but that doesn’t mean deals aren’t getting done. Fortune has learned that Vista Equity Partners has bought a majority of Gatekeeper, a vendor & contract lifecycle management platform.
The transaction values Gatekeeper at more than $100 million, according to people close to the deal. It is the U.K. company’s first outside investment since its launch in 2012.
Gatekeeper started out as a procurement consultancy, helping large businesses optimize the cost of their IT contracts, said CEO and founder Patrick O’Connor. It ended up with “tens of thousands of contracts to manage,” he said. This spurred Gatekeeper to seek a solution in the market and were underwhelmed by what they saw, he said. They ended up building their own software to help companies centralize contract data, as well as manage vendor and third-party relationships, O’Connor said. "We allow customers to restore visibility, take back control and safeguard compliance,” he said.
Gatekeeper now has over 300 global customers, including Autotrader, Pizza Hut, The Telegraph and Crocs. It is cash flow profitable and employs a staff of 92 people. “We are a completely remote and distributed SaaS company,” O’Connor said.
Companies typically use spreadsheets and online drives to manage their contracts and vendor relationships. “It's a very messy problem to solve and it's completely greenfield. So, we now find ourselves in a scenario where the opportunity ahead of us is just incredible,” O’Connor told Fortune.
About four months ago, Gatekeeper launched a sales process. It hired Shane Seelig, a director at PEAK Technology Partners, to find a buyer. Early on in the process, Abhay Puskoor, a senior vice president at Vista Equity, visited Gatekeeper, spending the afternoon with O’Connor and his team in the Jersey Channel Islands. O’Connor said he was “super impressed” with Puskoor’s knowledge of the sector and his grasp of the opportunities available for Gatekeeper.
Gatekeeper ended up choosing Vista because it wants to expand in the VCLM space. “We really needed a partner that could put in both the capital, and the crucially [needed] expertise to take us from where we are now, and scale us into the dominant player within this new category that we've created,” said O’Connor, who is staying with the company he founded.
Vista’s investment is coming from its second endeavor fund, a small cap pool led by co-heads Rachel Arnold and René Yang Stewart. Endeavor focuses solely on companies that offer B2B software. It targets businesses that have recurring revenue of between $10 million to $40 million. In 2019, Endeavor fund II raised $850 million, according to a statement from that time.
The Gatekeeper transaction shows the enduring power of smaller deals. Global private equity deal valuations dropped nearly 50% to $1.2 trillion year-to-date through Oct. 16, while the number of transactions fell nearly 31% to 4,436 transactions, according to data from Dealogic. There have been just three LBOs valued at more than $10 billion this year, down from six in 2022.
But Vista’s Endeavor fund continues to do deals. Gatekeeper is Endeavor’s fourth investment this year. Other deals include Resilinc, Innovaptive, and Benchmark Gensuite so far in 2023. Endeavor has also posted exits, selling part of its stakes in Zapproved, Tripleseat, and Fusion Risk Management.
Gatekeeper may also consider going public, but any IPO would be “way down the line,” O’Connor said. “We've got so much opportunity to capitalize on and put ourselves in that position.”
See you tomorrow,
Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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