After reports earlier this year that it was looking at launching an initial public offering, Bain Capital-backed BMC Software said May 29 that it has agreed to be sold to KKR.
Deal terms weren’t disclosed, but media reports put the price tag at $10 billion, which was about how much the IPO would have valued the company including debt.
Technology-focused private equity firm Thoma Bravo also was in the running to purchase the information technology software provider, the New York Post reported May 23. The newspaper said May 29 that the sale price amounted to $8.3 billion, citing unnamed sources.
The newspaper said there hasn’t been a private equity firm-led leveraged buyout for more than $10 billion since 2013, when Austin billionaire Michael Dell and Silver Lake Management took computer maker Dell private.
Bain and Golden Gate Capital took BMC private in 2013 for $6.9 billion. Other BMC owners were GIC, Insight Venture Partners and Elliott Management.
BMC went with Kirkland & Ellis as its outside legal counsel, but no one in the firm’s Houston office. Simpson Thacher & Bartlett advised KKR with lawyers out of New York.
Willkie Farr & Gallagher represented Insight Venture Partners with lawyers in New York.
Goldman Sachs, Credit Suisse and Morgan Stanley provided financial advice to BMC while Macquarie Capital did so for KKR. Credit Suisse, Goldman Sachs, Jefferies, Macquarie and Mizuho Bank are providing financing for the transaction, which is expected to close in the third quarter.
BMC general counsel Patrick Tagtow wouldn’t comment on the deal to The Texas Lawbook.
Tagtow joined BMC in 1999 from Haynes and Boone, where he practiced commercial and employment litigation after working as an associate at Johnson & Gibbs. The University of Houston-trained lawyer was vice president of litigation and compliance before taking the top legal spot at BMC in 2011.
Tagtow worked on some big cases at the company, including a shareholder class action and an appraisal action after its purchase by Bain and Golden Gate; and three patent infringement suits the company filed against ServiceNow that were settled in 2016.
Irene Kosturakis is BMC’s chief intellectual property counsel while Darcy Walker is the company’s labor and employment counsel.
Over the years, the company has tapped Matt Yarbrough – a former assistant U.S. Attorney in Dallas who joined Squire Patton Boggs at the end of last year – on litigation, intellectual property, white collar and cyber law matters. Yarbrough’s onetime colleague Victor Johnson – who is now at Dykema – also worked with the company on IP issues.
Ted Meyer, a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart in Houston, counseled BMC on labor and employment issues. A partner in Kirkland & Ellis’ New York office worked with BMC on the appraisal action with Merion Capital.
Reuters reported in February that BMC has been facing increasing competition from software-as-a-service providers. Last year it explored a merger with peer CA Inc. but couldn’t work out the debt financing issues, the news agency said.
BMC said it has more than more than 10,000 customers and 6,000 employees. It generated $1.8 billion in revenue for the 12 months ending Sept. 30, 2017, according to Moody’s Investors Service, with about half of its sales coming from the mainframe software business.
BMC was co-founded by John J. Moores in 1980 to sell software he designed to make IBM mainframe computers run more efficiently. He retired from the company in 1992, succeeded by Richard Hosley, who took BMC public in 1988. The company was later led by CEO’s Max Watson, Bob Beauchamp and, since 2016, Peter Leav.