Phoenix, AZ and Rochester, NY — Calero Software and MDSL, two high-growth software providers in the recurring Technology Expense Management space, today announced plans to merge. Oak Hill Capital will make a significant new investment—joining Riverside Partners, Calero’s existing financial sponsor—as the lead investors in a growth re-capitalization of Calero and subsequent funding of the combination with MDSL. Sumeru Equity Partners (“SEP”), MDSL’s financial backer, will also continue as a significant investor in the combined business. The closing of the merger is expected in late Q4 or early Q1 and remains subject to customary regulatory and other approvals. Financial terms of the transactions were not disclosed.
Calero and MDSL provide Enterprise Technology Expense Management (TEM), Market Data Management (MDM) and Managed Mobility Services (MMS) software and services to help enterprises manage their mission-critical and highly complex recurring expenses across fixed-line and mobile telecommunications, market data subscriptions, Internet of Things, SaaS and Cloud Infrastructure operations. Together, after closing, Calero and MDSL will provide best-in-class solutions for their customers, as well as outstanding growth opportunities for their highly talented employees. Once combined, the companies will have additional resources to accelerate significant investments in product development and customer service innovation, including in exciting growth areas such as IoT, SaaS and Cloud.
Charles Layne, CEO of MDSL, will lead the merged company as CEO. Scott Gilbert, currently COO of Calero Software, will serve as President of the merged company. The combined business will have over 800 highly talented employees, serve more than 3,500 customers and continue to operate from its existing facilities.
“We are incredibly excited to announce the combination of Calero and MDSL,” said Steven F. Kaplan, General Partner of Riverside Partners, Calero’s current Chairman. “Both Charles and Scott are accomplished executives who bring the leadership, passion and industry experience required to take the combined company to the next levels of success. I am also pleased to report that Joe Pajer, currently CEO of Calero, will remain highly involved with the business and will serve as a Board member of the new company, assisting with the efforts to combine these two companies.” Mr. Kaplan will continue to serve as Chairman of the merged companies.
CEO Charles Layne said, “During the past 25 years, both MDSL and Calero have focused on technology innovation and automation, which our clients have embraced and appreciated. We want to assure all of our customers that they remain our top priority as we plan for the combination of these two businesses.” Mr. Layne added, “Calero and MDSL will continue to support all existing customer technology platforms and will maintain the outstanding customer service levels customers have come to expect from both companies, even as we add new capabilities and insights to our solutions set. We believe that bringing together these two forward-thinking, customer-fixated organizations will drive bolder innovations, accelerated timelines, and more value for companies in managing technology expenses.”
Adam Hahn, Principal of Oak Hill, stated, “Technology Expense Management is a fast-growing space that addresses complex customer pain points and possesses attractive business model characteristics that match Oak Hill’s targeted investment criteria. Calero and MDSL are high-performing players within this space, with outstanding product features and excellent reputations for high quality service. We are excited to partner with the Calero and MDSL management teams and employees, and with Riverside and SEP, to lead a new chapter of continued growth.”
Joe Pajer, Calero’s current CEO, said, “With the completion of the combination of Calero and MDSL, I will be joining the Board of Directors and will continue to support Riverside and the combined company as we bring together two highly successful businesses. I am thrilled at the opportunity for our employees and very excited for our new partnership with Oak Hill and SEP.”
George Kadifa and Sanjeet Mitra, Managing Directors at SEP and MDSL Board Directors, said, “MDSL and its management team have delivered incredibly strong performance and aggressively advanced product innovation in the TEM space since our partnership began in 2016. We are highly enthusiastic about a partnership with Oak Hill, Riverside and the Calero team and strongly believe this merger will enable the companies to continue to deliver best-in-class satisfaction and product leadership to customers while employing the most talented workforce in the industry.” As a part of the transaction, Mr. Mitra will continue to serve as a Board Director of the merged company.
William Blair served as financial advisor and Kirkland & Ellis served as legal advisor to MDSL. Choate served as legal advisor to Calero and Riverside. UBS Investment Bank served as financial advisor and Paul Weiss as legal advisor to Oak Hill. Transaction financing is being provided by Golub Capital.
About Calero
Calero Software is a provider of Communications and Cloud Lifecycle Management (CLM) solutions designed to turn communication data into actionable insight by simplifying the management of voice, mobile and other unified communications services and assets. With a deep commitment to innovation and customer service, Calero’s CLM approach enables organizations to support the full communications lifecycle, from procurement to payment, including software and services that aid Telecom Expense Management (TEM), Managed Mobility Services (MMS) and Usage Management. Calero Software has thousands of customers in over 50 countries worldwide, including corporations, universities and government agencies. Learn more at www.calero.com.
About Oak Hill Capital
Oak Hill Capital is a private equity firm managing funds with approximately $15 billion of initial capital commitments and co-investments since inception. Over the past 33 years, Oak Hill Capital and its predecessors have invested in over 90 private equity transactions across broad segments of the U.S. and global economies. Oak Hill Capital applies an industry-focused, theme-based approach to investing in the following sectors: Consumer, Retail & Distribution; Industrials; Media & Communications; and Services. Oak Hill works actively in partnership with management to implement strategic and operational initiatives to create franchise value. For more information, please visit www.oakhill.com.
About Riverside Partners
Founded in 1989, Riverside Partners is a middle market private equity firm currently investing Riverside Fund VI, L.P. The fund focuses on growth-oriented companies primarily in the healthcare and technology industries. Riverside Partners is particularly experienced at partnering with founders, owners and management teams and it brings substantial domain expertise and operating experience to its portfolio companies. For more information, visit www.riversidepartners.com.
About Sumeru Equity Partners
Sumeru Equity Partners (“SEP”) is a technology-focused private equity firm that invests in middle market companies across software, technology-enabled services and hardware. The firm employs a growth-oriented partnership model with technology companies and typically invests $25-200 million per transaction. The firm was founded in 2014 by an experienced team from Silver Lake Sumeru, a private equity fund started in 2007 within Silver Lake. SEP has a longstanding history of investing and partnering with founders and management teams to build growth leaders. SEP has backed leading software companies such as ForeFlight, GoGuardian, Azuga, Blackline, Talend, Kyriba and Buildium. MDSL has been in the SEP portfolio since 2016. For more information about SEP and its full portfolio, please visit www.sumeruequity.com.