Warburg Pincus and TA Associates Enter into an Agreement to Sell Procare Solutions to Roper Technologies
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Insights
The acquisition of Procare Solutions by Roper Technologies represents a strategic move to consolidate Roper’s position in the software services sector, particularly in early childhood education management. The transaction value of $1.86 billion underscores the significance of Procare’s market presence, with its software being a critical infrastructure component for over 37,000 child care centers. This acquisition may result in increased market share for Roper and potentially drive up its stock value as investors often react positively to growth through acquisition, especially when it enhances a company's competitive edge in a niche market.
Procare’s growth trajectory, marked by customer expansion and product innovation, suggests a strong performance that could be accretive to Roper’s earnings. The focus on SaaS solutions aligns with the broader industry trend towards cloud-based services, which are favored for their scalability and recurring revenue streams. This acquisition could also lead to operational synergies, reducing costs and improving margins over the long term. However, integration risks and the premium paid for the acquisition could weigh on Roper’s financials in the short term.
The valuation of Procare at $1.86 billion indicates a robust enterprise value, which is a critical factor for stakeholders to consider. From a financial perspective, the deal's structure will influence Roper’s balance sheet and cash flow. If financed through debt, it could increase leverage ratios, while a stock transaction might dilute existing shareholders. The market will be observing the impact on Roper's financial metrics, such as earnings per share (EPS) and return on invested capital (ROIC), to gauge the financial prudence of this acquisition.
Investors should also consider the timing of the deal, set to close in the first quarter of 2024. The anticipation of regulatory approvals indicates due diligence but also introduces a timeline for potential market reaction. The involvement of prominent financial and legal advisors suggests a well-structured deal, potentially minimizing execution risk. The transaction is likely to be scrutinized for how it aligns with Roper's strategic goals and whether it can deliver the expected synergies and growth prospects.
The pending regulatory approvals signal the transaction's compliance with legal and antitrust frameworks, which is a fundamental aspect of such deals. The role of Kirkland & Ellis LLP as legal counsel for Warburg Pincus highlights the importance of expert legal guidance in navigating the complexities of mergers and acquisitions. This aspect is particularly relevant in the technology sector where intellectual property rights, data privacy and regulatory compliance are crucial.
For stakeholders, the legal robustness of the deal is reassuring, but they must remain cognizant of the time and resources required to clear regulatory hurdles. Any delays or unexpected legal challenges could affect the expected benefits of the acquisition. It is essential to monitor the fulfillment of customary closing conditions, which can include approvals from industry-specific regulators, especially when the transaction involves essential services like child care management software.
Sale reflects Procare's industry leading position in child care management, providing an essential software service in early childhood education
Procare is a leading provider of center management software and integrated payment processing solutions to child care centers in the US, enabling administrators to maintain a core system of record and workflow for operational, compliance, staffing, billing, and accounting functions. Procare provides a broad, high-quality product suite that serves the unique and complex demands of more than 37,000 child care centers. Founded in 1992, Procare is a true end-to-end solution that supports customers of all sizes, from single-center operations to complex nationwide enterprises.
Warburg Pincus partnered with Procare over five years ago, working with the company to capitalize on its leading position in the child care industry through customer expansion, product innovation and strategic acquisitions. Procare's significant growth was fueled by the combination of accelerating new center additions and continued adoption of new product modules such as its payments processing, family engagement and curriculum offerings.
"Our mission at Procare is to meet the complete management and family communication needs of all child care organizations, helping centers improve the education of young learners. I am proud of the successes and growth of our company and look forward to working with the Roper team to take us to the next level," said JoAnn Kintzel, CEO of Procare. "I would also like to thank Warburg Pincus and TA for their support and partnership, resulting in this exciting new chapter for our company. Through our partnership, we have achieved incredible growth and had substantial impact on the child care industry, providing essential technology and automation tools for centers and families to navigate everything from addressing day-to-day needs to managing child care through a global pandemic."
"It has been a privilege to support Procare through a period of transformative growth, partnering closely with the management team to build on its market leading position. We are proud of Procare's financial success and the key role it plays in supporting the child care industry," said Ash Somani, Managing Director, Warburg Pincus. "Over the course of our partnership, Procare focused on enhancing its suite of next-generation SaaS solutions, becoming an essential partner for digital adoption in child care centers across the country," added Michael Ding, Principal, Warburg Pincus. "Procare is a strong example of our firm's focus on growth and sector collaboration, combining the experience of our technology and financial services teams with the ultimate goal of building an industry leader with sustainable value. We wish JoAnn and the Procare team the best in their next chapter," added Chandler Reedy, Managing Director, Co-Head of Business Services, Head of Strategic Investments, Warburg Pincus.
"We are thrilled by the growth trajectory Procare exhibited during our partnership and we look forward to watching Procare continue to expand and drive further momentum," said Jason Mironov, Managing Director, TA.
The transaction is expected to close in the first quarter of 2024, subject to regulatory approvals and customary closing conditions.
William Blair & Company, LLC served as lead financial advisor and Raymond James & Associates, Inc. served as an advisor to Warburg Pincus. Kirkland & Ellis LLP served as legal counsel to Warburg Pincus.
ABOUT WARBURG PINCUS
Warburg Pincus LLC is a leading global growth investor. The firm has more than
ABOUT PROCARE SOLUTIONS
For more than 30 years, Procare Solutions has been helping early childhood educators simplify operations and create meaningful connections with families, so they can focus on what matters most – the children in their care. From registration, attendance tracking, staff management and lesson planning to family engagement, tuition collection and reporting, we help ease the challenges faced of running a child care business. Our dedicated team of support professionals also make it easy to get up and running quickly and answer questions along the way. That's why over 37,000 customers choose Procare. We are proud to be number one in child care management software. For more information, visit ProcareSoftware.com.
ABOUT TA ASSOCIATES
TA is a leading global private equity firm focused on scaling growth in profitable companies. Since 1968, TA has invested in more than 560 companies across its five target industries—technology, healthcare, financial services, consumer and business services. Leveraging its deep industry expertise and strategic resources, TA collaborates with management teams worldwide to help high-quality companies deliver lasting value. The firm has raised
CONTACT
Sarah McGrath Bloom, Warburg Pincus
Sarah.bloom@warburgpincus.com
Nicole Marino, Procare Solutions
press@procaresoftware.com
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SOURCE Warburg Pincus LLC
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