M&A: Thoma Bravo Completes EQS Group Acquisition; Gains Compliance and Sustainability Software

Private equity firm Thoma Bravo has completed the EQS Group acquisition for roughly €400 million (US$430.9 million).

The deal's valuation is roughly 40 times EQS Group's original EBITDA expectations for 2023 -- though EQS Group reduced its annual EBITDA expectations because of one-time costs associated with the M&A deal.

This is M&A deal number 88 that Sustainable Tech Partner has covered so far in 2024. See all M&A deals involving sustainability, climate tech and green IT services listed here.

This is Thoma Bravo's second ESG-related software acquisition in recent weeks. The other deal involves Everbridge.

Thoma Bravo Acquires Compliance Software Company: Business Backgrounds

EQS Group, founded in 2000, is based in Munich, Germany. The company, backed by roughly 600 employees, develops a cloud-based software platform that allows customers to manage corporate compliance and investor relations tasks.

The software also allows customers to comply with the German Whistleblower Protection Act. More than 2,800 new customers adopted EQS's software in 2023 to comply with that act, the company said in December 2023.

EQS attempted to further expand into the ESG (Environmental, Social and Governance) market when it tried to acquire DFGE in February 2022, but that deal was scrapped because the parties couldn't agree on deal terms. As a result, EQS Group launched a dedicated ESG software group led by Deloitte Germany veteran Thomas Krick, EQS Group disclosed in May 2022.

Thoma Bravo, founded in 2008, is based in Chicago, Illinois. The private equity firm had $130 billion in assets under management as of 2023. Thoma Bravo typically acquires enterprise software companies. The private equity firm also invests in MSP-focused software providers -- such as ConnectWise.

This is Thoma Bravo's first acquisition in Germany. The deal, announced in November 2023 and finalized in February 2024, will allow EQS to "accelerate product innovation and fully seize the long-term growth opportunities in Europe," the companies said in the original M&A announcement. Part of the Thoma Bravo strategy includes potential tuck-in acquisitions for the software company.

ESG Software Market Growth Forecast, Executive Perspectives

EQS competes in a growth market. Global ESG software sales are expected to reach $1.5 billion by 2027, up from $700 million in 2022, according to Markets and Markets. The ESG software industry is crowded with competitors, Thoma Bravo sees some unique opportunities ahead.

In a prepared statement from the initial November 2023 M&A announcement, Thoma Bravo Partner Irina Hemmers said: “EQS is a unique German software enterprise at the forefront of three megatrends: digitization, regulation and ESG, which have been driving its profitable growth. Together with Achim Weick and the experienced team at EQS, we will build and expand the platform into a pan-European Compliance and ESG champion for the benefit of customers’ evolving needs in this very dynamic market. Thoma Bravo is excited to join forces with EQS’ management team to enhance its development of state-of-the art software solutions.”

Added EQS Founder and CEO Achim Weick: “In the past 23 years, EQS has gone from strength to strength, evolving into a RegTech leader which delivers software solutions to thousands of clients including all DAX40 companies as well as blue chip corporations around the world. From day one we firmly believed that transparency creates the most important corporate capital: trust. We empower companies not only to achieve major milestones on the capital markets, but also to become and stay trusted by all stakeholders. Working with Thoma Bravo will allow us to enter into the next chapter of our growth journey. Together, we will succeed in establishing our EQS COCKPIT as the leading European compliance management system for organizations of all sizes. With its expertise in software, demonstrated track record and passion for delivering transformative technologies, Thoma Bravo is the right partner to support our growth ambitions.”

We'll be watching for potential tuck-in acquisitions.