We recently completed some analysis of enterprise software purchasing trends in mid-market and large enterprise businesses. We looked at industry data from the last 7 years and came to a few interesting insights. Private Equity has been known to be conservative in IT investments. As our data shows, as PE becomes a larger part of the economy, they also shift more to cloud solutions in their software choices.
Here are a couple of insights shown in the graph. (Company specific data was removed to show trend)
- Private Equity owns a bigger portion of midmarket and enterprise-size businesses in the US. Industry estimates range from 20-25% in midmarket ($100-500M revenues) and 8-12% in enterprise ($500M and above). We found no analysis on EBITDA basis but assume similar ratios.
- PE operating teams are expanding to focus beyond sales growth and spend management into enterprise IT projects
- As the number of PE portfolio companies grow, we saw the growth rate of PE portfolio driven projects far exceed the growth of non-PE owned company purchases
- This accelerates the trend of more surgical, function-specific cloud projects driven by the investment theses vs enterprise-wide transformations
- The growth of functionally focused projects actually accelerate digital transformation of purchasing, talent management and digital commerce.