UNIT4 Acquisition: Key Details, Impact, and What Comes Next

TA Associates' acquisition of Unit4, valued at over $2 billion, marks a significant move in the enterprise software industry. This strategic buyout is expected to accelerate Unit4's growth, particularly in cloud-based ERP solutions for mid-market organizations. The partnership aims to enhance Unit4's market position and drive innovation across various sectors, including professional services and education.

What Is UNIT4?

Founded in 1980, Unit4 specializes in enterprise software solutions, offering products such as Enterprise Resource Planning (ERP), Financial Planning & Analysis (FP&A), Financials by Coda, Human Capital Management (HCM), and Source-to-Contract by Scanmarket (S2C). Unit4 differentiates itself with an integrated AI platform that simplifies processes and controls costs, tailored solutions for various departments, and a customer-centric approach that emphasizes personalized relationships and value-driven success.

Who Acquired UNIT4?

TA Associates is a leading global growth private equity firm known for partnering with high-quality companies to accelerate their growth. The firm focuses on five core sectors: Business Services, Consumer, Financial Services, Healthcare, and Technology. TA Associates leverages deep industry expertise and strategic resources to drive innovation and success. Recognized as a top performer in the private equity market, the firm has a strong track record of successful investments and strategic partnerships across multiple sectors globally.

When Was UNIT4 Acquired?

TA Associates acquired Unit4 on March 22, 2021. This acquisition occurred during a period marked by significant activity in the enterprise software sector, particularly in cloud-based ERP solutions. The deal, valued at over $2 billion, aligns with industry trends emphasizing digital transformation and the growing demand for specialized, people-centric software. The timing also reflects a robust market for strategic growth buyouts, driven by the need for mid-market businesses to enhance operational efficiency and user experience.

Why Was UNIT4 Acquired?

Market Expansion: The acquisition aids in entering new markets by leveraging TA Associates' investment to fuel Unit4's growth, particularly in North America. The focus on vertical market acquisitions, such as architects, construction, and engineering, allows Unit4 to broaden its presence and unlock new industries.

Technology Integration: TA Associates benefits from Unit4's technology through the launch of ERPx, a next-generation cloud-native ERP platform. This partnership aims to drive rapid innovation in cloud-based product offerings, enhancing Unit4's ability to support the growth aspirations of its customers.

Competitive Advantage: The acquisition strengthens their position against competitors by emphasizing Unit4's "people-centric ERP" for mid-market enterprise organizations. The partnership with TA Associates and the expansion of Unit4's global partner ecosystem position the company for transformative growth and enhanced market competitiveness.

Acquisition Terms

• Acquisition Price: The transaction value is in excess of $2 billion.
• Payment Method: The specific payment method was not publicly disclosed.
• Key Conditions or Agreements:
  • The transaction is expected to close in early summer of 2021, pending customary regulatory approvals and closing conditions.
  • Advent International, the current majority shareholder, will exit its stake in Unit4.
  • Mike Ettling, CEO of Unit4, will continue to lead the company, supported by the existing management team.
  • Partners Group will invest alongside TA Associates on behalf of its clients.
  • The fresh investment will be used to fuel growth through product development and acquisitions, particularly in North America and through the ERPx platform.
  • Arma Partners and Evercore are serving as financial advisors, and De Brauw Blackstone Westbroek is acting as legal counsel to Unit4.
  • Alvarez & Marsal is serving as financial and tax advisor, and Kirkland & Ellis is acting as legal counsel to TA Associates.

Impact on UNIT4

The acquisition of Unit4 by TA Associates has led to several operational and management changes. Mike Ettling continues to lead as CEO, supported by the existing management team, ensuring stability and continuity. The exit of Advent International, the previous majority shareholder, marks a significant shift in ownership. The management team played a proactive role in seeking a new investor, emphasizing their strategic vision and alignment with TA Associates' growth strategy. This transition is expected to drive strategic acquisitions and accelerate growth, particularly in North America.

In terms of product offerings, the acquisition has bolstered Unit4's commitment to innovation, particularly with the launch of ERPx, their next-generation cloud-native ERP platform. The partnership aims to expand Unit4's global partner ecosystem and deepen investments in core and growth markets. Customers have expressed a need for rapid innovation to support their growth aspirations, and the acquisition is seen as a positive step towards meeting these demands. While specific employee reactions are not detailed, the focus on growth and innovation suggests a forward-looking outlook for both employees and customers.

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