Business, Finance

Providence Strategic Growth said to have a deal “north of $1 billion” for Tribute Technology

Foundation Partners why I partnered

Back in September we published this article about Providence Strategic Growth (Providence Equity) planning to put their funeral software firm, Tribute Technology, on the market.  At that time. the article that we had read from Barron’s mentioned that Providence believed that they could get a $1 billion offer for their assemblage of companies that they have turned into Tribute Technology.

This article, published the other day, from PE Hub (provide your email to PE Hub to get access the article) says that pending final documentation Providence believes that they have sold the company to the Carlyle Group and Vista Equity for what is indicated as “north of $1 billion”.  According to the article, Carlyle would be the majority owner of Tribute.

The article goes on to say that Tribute Technology has recorded an EBITDA of $50-60 million and the Barron’s article stated that the price tag would probably be about 18-20 times EBITDA.

According to the PE Hub article, Tribute Technology is defined as an e-commerce driven technology and software enabled funeral arrangement service.  Some of the companies that have been grouped into Tribute Technology are:

  • ADPerfect
  • SRS Computing
  • Frazer Consulting
  • Front Runner Professional

 

  • Case management software
  • eCommerce
  • Payment Processing
  • Websites
  • Online publishing
  • Insurance assignments
  • Funeral crowdfunding
  • Funeral Financing
  • Personalization products

Funeral Director Daily take:  The older I get the more amazed I seem to become at the prices that are paid for certain assets.  I see it in my home town with the price paid for some commercial properties and I’ve rolled my eyeballs at some prices I’ve seen paid for funeral homes.  And, a billion dollars for software products in the funeral business seems like a lot of money.

However, assets are generally worth, in a business sense, the profits that they are able to generate.  Professionals know this. . . and very rarely are willing to overpay.  Professionals, while some may roll the dice, generally will walk away from a deal before overpaying.

In the funeral home business, without being too general in nature, you usually see those businesses sell for somewhere between 5-12 times EBITDA.

I’m pretty sure that the people at Carlyle and Vista Equity see the price paid for Tribute Technology as fair and believe that they can grow the business as technology becomes a bigger and bigger part of funeral service.  Sometimes, visionaries who see things in a different way, see what many of us think as a high price as a bargain.  Tribute Technologies may turn out to be that for them.

I have a retired friend who was once a CEO of a Fortune 100 company in the United States.  We’ve talked about acquisitions, price, visions, and market many times.  I always remember him telling me that he once paid 26 times EBITDA for a company that turned out to be a real money maker for his company because they positioned the product differently from where the previous owner had positioned it.  It was the vision that gave it extra value.

Time will tell if Carlyle and Vista Equity have that “vision” with Tribute Technologies.

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