Vista Equity Partners has agreed to sell Applied Systems, a University Park, Illinois-based company that produces software for the insurance industry, to Bain Capital for around $675 million.
Bain Capital partnered with Applied CEO James Kellner and other senior management in the deal. The management team will also own a stake in the company.
Founded in 1980, Applied Systems is one of the leading providers of technology and services to the independent agent and broker marketplace. The company’s core products are The Agency Manager, The Agent Manager Vision Series, and DORIS. Vista Equity Partners bought the company in 2004 from company founder Robert Eustace. The company makes software for 10,000 insurance agencies throughout the US. The software enables the agencies to automate and track information.
The deal follows an auction process that lasted several months and attracted a number of private equity firms including Madison Dearborn Partners. Bain is making the investment from its $10 billion ninth fund, which closed in April after being raised in three months.
Bain Capital has been investing in software for over 20 years and has a number of other software/business services companies in its portfolio, including SunGuard Data Systems, which sells software to financial services firms. A number of other private equity firms have also made recent technology investments, including last week’s investment in the semiconductor business of Royal Philips Electronics by Kohlberg Kravis Roberts and Silver Lake Partners.
Bain managing director Andrew Balson said software companies are attractive to the firm because they are a necessary component for many companies and have high growth potential.
“With Applied, and some of our other companies that have a similar investment thesis, the software they sell is clearly valuable to customers,” he said. “You’re not creating something that’s just nice to have; you’re creating something that customers really value and really need. That’s a pretty good starting point to build an interesting and successful business.”