Private equity (PE) firms cycle between platform investment and value creation, shifting strategies to adapt to market conditions. Recently, higher interest rates and tough exit conditions have made operational efficiency and strategic acquisitions central to PE success. For software companies, aligning with these cycles—either as a platform acquisition or as a bolt-on target—can be transformative.

Platform Investments

Platform investments, typically valued at $20 to $30 million or more, serve as PE anchor acquisitions. These foundational investments enable growth through bolt-on acquisitions, allowing PE firms to build scalable, operationally leveraged portfolios without relying solely on organic expansion. Software companies suited for platform status often show strong market traction and product innovation, making them solid bases for future acquisitions.

Bolt-On Acquisitions

Bolt-ons enable platform companies to expand capabilities quickly and with low risk. For smaller software companies, positioning as a bolt-on target can unlock acquisition opportunities, especially if they provide niche solutions or market-specific advantages that deliver value.

Value Creation and Strategic Opportunities

In times of uncertainty, PE firms emphasize value creation—improving operations, streamlining workflows, and enhancing margins. Even then, strategic bolt-ons remain valuable, adding revenue and capabilities without high development costs.

Hemisphere Partners leverages deep M&A expertise to guide software companies in aligning with these cycles, maximizing appeal to PE platforms and bolstering value even in volatile markets.