What can we learn from ClearCourse’s deal hangover?

Disclaimer: Views expressed here are the author's own and based on public sources. The article is intended for informational purposes only. This is not financial advice. Please consult a professional for investment decisions.

Private equity is eyeing up software HoldCos big time. In a bid to win the business owners’ hearts and souls, HoldCo purists crow on about PE money being “hot potato”-like. We agree…but in a very narrow sense: eventually, PE backed platforms do require exits.

At exit, quality matters. But so does size.

There is ample evidence that scaled-up HoldCos command premium valuations - same way that scaled-up buy & builds do. And by “scaled up” we mean revenues ideally north of $200M. 

Divide this figure by typical aggregator a) deal flow ($2-5M revenue bought for 2-4X) and b) holding period (5 to 8 years), and you get a sense of the pressure these HoldCos are under. 

There are different ways to cope with this pressure. Some, like Valsoft, build up M&A capacity over time (14 acquisitions in 2021 vs. 23 in 2023). Others quite literally go on M&A binges. Inadvertently, such binges are followed by hangovers...

Today, we bring you the story of ClearCourse: a 6-year old, battle hardened British software serial acquirer with nearly 40 acquisitions under its belt.

Before we tuck in: German speakers please read 🇩🇪🇨🇭🇦🇹

Alex P here 👋 when I told you I was building a recruitment business, I wasn't kidding.

I am now recruiting for the CEO / founder role for a HoldCo of mission critical software businesses in the DACH region.

This new venture is backed by a very reputable institutional investor. You heard that right: a single LP writing a check into the platform that you are going to build from scratch. Think Visma. Or Valsoft. But yours.

Must haves: native fluency in German; prior M&A origination and execution experience; hustler mindset. And of course a passion for software.

Interested? Email [email protected] with your CV / Linkedin and some slots for a call.

TL;DR

A 30-second snippet of ClearCourse goes like this. Founded in 2018 by the private equity firm Aquiline as a remake of Fullsteam, a US software aggregator that perfected the trick of internalising payment streams. ClearCourse’s M&A engine quickly sprang into action, at one point averaging a deal a month.

Then, somehow organic growth dried up and it aggregator began to haemorrhage cash. In early 2023, the CEO and the CFO both left.

Lately, ClearCourse appears to be turning the corner. It is financially healthier and back on the M&A trail. 

About time: according to the public filings, until now, the ClearCourse has consumed nearly £300M ($400M) in capital. 

Read on to learn:   

• What is ClearCourse's business model?

• What kind of businesses has ClearCourse acquired, and for how much?

• Financially, how has ClearCourse performed?

• How is ClearCourse capitalised? How is the management incentivised?

Let’s take a moment to acknowledge the sponsor of today’s newsletter: the HoldCo Conference. 

The conference will be held in early April 2025 at the Sundance Ski Resort in Utah, and will be headlined by none other than the legendary Michael Girdley!  It is aimed at HoldCo owners, operators, and executives looking to meet, learn, scale and grow. I have already bought my ticket: time to get yours. 

The tickets aren't cheap, but how about:

• A 20% discount (insert the promo code “rollupeurope” at checkout); and 

• An all-access pass that includes all speaking / breakout sessions, ski activities, meals, lodging, swag…and much more!

Ok, back to the main topic…

What does ClearCourse do?

Clearcourse's original remit was to acquire vertical market software businesses in the UK that service the membership, business services, leisure, retail and hospitality sectors. 

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