The rollup of distressed SaaS

Let’s face it: there are two types of rollup narratives that mainstream media loves:

1. A secretive, private equity backed consolidator buying up chunks of a highly fragmented b2c industry, provoking the wrath of the general public, followed by an antitrust investigation (e.g. healthcare seems to attract a lot of scrutiny)

2. Same type of consolidator buying “diamonds in the rough” type businesses from increasingly desperate VCs at a fraction of their 2021 valuations

Fortunately or not, we don’t have any experience or exposure to #1.

So here’s our take on #2.

Up until now, we’ve seen more examples of rollups shutting down / selling back failed acquisitions, than we have seen acquisitions of distressed VC backed companies. That said, Brookfield and Sequoia Heritage have teamed up to take advantage of the growing VC to PE deal flow (link), alongside a gaggle of independents like Curious, Arising Ventures and Tikto (link).

So how’s the deal flow?

It’s picking up!

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