CD&R Explores Partial Sale of Software Maker Epicor

CD&R Considers Partial Divestment of Epicor

Private equity firm Clayton, Dubilier & Rice (CD&R) is exploring the possibility of selling a minority stake in Epicor Software Corp, a business software company it acquired in 2020. According to sources familiar with the matter, the potential deal could value Epicor at more than $15 billion, including debt 1

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Epicor's Market Position and Growth

Epicor, founded in 1972, has established itself as a significant player in the enterprise resource planning (ERP) software market. The company provides cloud-based software solutions for manufacturing, distribution, and service industries. Since CD&R's acquisition, Epicor has experienced substantial growth, with its earnings before interest, taxes, depreciation, and amortization (EBITDA) reportedly doubling to around $700 million 2

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Potential Buyers and Deal Structure

CD&R is said to be considering selling up to 25% of Epicor to potential investors. The private equity firm has engaged investment banks to identify prospective buyers, which may include other private equity firms and pension funds. However, sources caution that there is no certainty that the discussions will result in a transaction 1

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Market Context and Implications

The potential sale comes at a time when the technology sector is experiencing a resurgence of deal activity. After a period of subdued mergers and acquisitions due to high interest rates and economic uncertainty, the market is showing signs of recovery. This exploration by CD&R could be seen as a test of investor appetite for large technology assets 2

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CD&R's Investment Strategy

CD&R's consideration of a partial sale aligns with typical private equity strategies. By selling a minority stake, the firm could potentially realize some returns on its investment while retaining control of Epicor. This move would allow CD&R to capitalize on Epicor's growth since its acquisition without fully exiting the investment 1

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Epicor's Recent Developments

Under CD&R's ownership, Epicor has pursued an aggressive growth strategy, including both organic expansion and acquisitions. The company has made several strategic purchases to enhance its product offerings and market reach. These efforts have contributed to Epicor's significant increase in EBITDA and overall valuation 2

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Confidentiality and Official Statements

As of now, both CD&R and Epicor have declined to comment on the potential sale. The confidential nature of these discussions is typical in such high-stakes financial transactions, with official statements often withheld until a deal is finalized or the process is concluded 1

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