Calgary-based software company valued at $500M
U.S. equity firm's acquisition of Absorb will ramp up product development: CEO
A Calgary-based software company with ambitious growth plans has been pegged at a valuation of more than half-a-billion dollars.
Absorb Software announced Tuesday it is being acquired by major U.S. private equity firm Welsh, Carson, Anderson and Stowe.
Financial terms of the deal were not disclosed, but the company said the deal is based on a valuation greater than US$500 million.
Absorb, which was founded in Calgary in 2002, produces cloudbased Learning Management System software that allows companies to offer training to employees and their extended supply chain online. It currently has more than 1,400 clients — including giants such as Anheuser-busch and Uber, in addition to a wide range of small- and medium-sized businesses — in 34 countries around the world.
Absorb was a largely bootstrapped company until 2017, when it completed a $59-million growth/recap investment from Silversmith Capital Partners, a Boston-based growth equity firm.
“That let us grow more rapidly and it's kind of brought us to the current stage,” said Absorb founder and CEO Mike Owens, who along with other members of Absorb's management team will remain a substantial shareholder in the company.
“I think we've grown by about 150 people in the last two-and-ahalf years.”
Absorb now has approximately 300 employees, about 225 of which are based in Calgary with the remainder spread across the company's London, Dublin, Shanghai, Sydney, Boston and Tampa offices.
Owens said the acquisition by Welsh, Carson, Anderson and Stowe will allow Absorb to accelerate product development and should mean the hiring of an additional 100 to 150 people — the majority in Calgary — within the next year.
Absorb saw record company growth in 2020, Owens said, achieving the milestone of $50 million in annual recurring revenue and growing its global enterprise customer base by more than 167 per cent year-over-year as the COVID -19 pandemic forced companies to convert to work-fromhome models and drove demand for Absorb's products.
But he added the company was in a good position even before the pandemic, recently leasing 80,000 square feet in the new Telus Sky tower downtown to accommodate its growth.
Owens said he believes his company is following a similar trajectory to two other Calgary-born software companies — Solium and Benevity — both of which in recent years were acquired for more than US$1 billion, giving them coveted “unicorn” status.
He said Calgary tech companies have traditionally struggled to attract venture capital, but that is beginning to change.
The software ecosystem for ... growing companies in Calgary now is way different than when we started in 2002.
“The software ecosystem for entrepreneurs and growing companies in Calgary now is way different than when we started in 2002,” Owens said.
“Banks understand it much more, industry understands it much more, and every time someone like ourselves or another one of the success stories brings a big investor to Calgary, that in turn attracts other investment money.”
Owens, who is staying on as CEO, said his ultimate goal is to take Absorb public within the next several years.
Describing himself as a “proud Albertan,” Owens said he hopes Absorb can play a role in encouraging diversification and growing the tech sector in this province.
“This company is a bootstrapped dream. We literally moved one of my children out of their bedroom and into the other's so that we could start the company in the kid's bedroom,” Owen said.
“And it grew from there. So I'd love it if it serves as an inspiration for other entrepreneurs to start their own software dreams.”