Vista Equity Partners will take Boston-based insurance software company Duck Creek Technologies private in an all-cash deal valued at $2.6 billion, Duck Creek said in January. The terms of the deal include a "go-shop" period until February 7, during which the company's board can solicit and consider alternate proposals.
Duck Creek is a SaaS-based software provider for the property and casualty (P&C) insurance sector. The company went public in 2020 and initially hit a market cap of around $5 billion. Its market cap later peaked at roughly $7 billion in early 2021, but Duck Creek’s fortunes have fallen lately, with its valuation dropping to below $2 billion in 2022.
Duck Creek serves some of the largest clients in the P&C sector, including Berkshire Hathaway Specialty Insurance and American International Group.
Vista Equity focuses on enterprise software, data, and technology-enabled businesses. Recently, private equity firms have targeted insurance companies, since their defensive business models hold up well in periods of economic uncertainty.
Over the past year, Vista has been at the center of some of the biggest enterprise deals. This includes partnering with Evergreen/Elliott to acquire Citrix for $16.5 billion and purchasing the automated tax compliance company Avalara for $8.4 billion. Meanwhile, Vista sold its disaster recovery company Datto for $6.2 billion.
Vista also has history in the insurance software space. Over the past couple decades, it has acquired the likes of Applied Systems, EagleView, and Vertafore.
“Vista has an established track record of partnering with leading enterprise software businesses within the insurance industry and related verticals,” Vista managing director Jeff Wilson said in a press release. “We are excited to work with the Duck Creek team as we look to build on their best-in-class platform and solutions, which serve many of the world’s leading P&C insurance carriers.”
"As one of the leading vertical software providers within the P&C insurance market, with attractive growth prospects and the potential for much higher margins at scale, we suspect other strategic and financial players will likely want to review the deal," Peter Heckmann, an analyst at brokerage D.A. Davidson, said in a note.
The deal is expected to close in the second quarter of 2023.
