Disclosure
Vista portfolio companies deliver average customer ROI exceeding 600%
“And today, the average ROI, return on investment, of the products that we sell to our customers, so this is the customer's benefit, is over 600%.”
Opinion
Traditional 10-year private equity fund lifecycles misfit enterprise software durability
“The construct of our industry is one of invest over five years, return over that next five, and so that's kind of, it was built 30 years ago. I don't think that model really applies specifically to enterprise software.”
Assertion Not checkable as stated
Major Asian economies currently lack defined enterprise software industry layers
“Four of the largest economies in the world actually don't have defined enterprise software layers. That's China. It's Japan. It is India and the Asian Peninsula. They don't have defined enterprise software. They have some enterprise software companies, or ente…”
Opinion
Vista has likely executed more cloud migrations than any global institution
“And so I think we've done more of those migrations than probably any institution on the planet today.”
Disclosure
Vista's operational reputation yields proprietary, off-market enterprise software deals
“And so that leads to a really interesting deal dynamic for us, which is we get a number of deals that no one ever sees. Because executives will come to us and say, hey, I saw what you did with Jamf, and Ping, and et cetera, and just spectacular performance.”
Assertion Not checkable as stated
Vista provided zero rescue financing across 68 portfolio companies during COVID-19
“During the pandemic, we had 68 portfolio companies. We didn't have to provide one dollar of rescue financing.”
Assertion Not checkable as stated
Vista has never missed an interest payment in over 20 years
“20 plus years. We haven't missed an interest payment or had any problems managing the capital structure of our businesses, but that's because we take a lot of time in the front end.”
Assertion Not checkable as stated
Vista frequently makes more on GP recaps than initial acquisitions
“In many cases we're making more money on the recapitalization after we've sold them half of it than we made on the first part.”
Assertion Supported
Late-1990s private equity firms overlooked enterprise software for chips
“And I realized that none of them, like any in that period of time, none of them are really thinking about software as an area of investment. Some may have had one or two software investments, but they were thinking about technology broadly, and at that time, t…”
Assertion Not checkable as stated
Smith notes that enterprise software is a 95% gross margin business
“One of which is, if you really think about it, it's a business, it's a 95% gross margin business at the end of the day.”
Insight
Software combines negative working capital with winner-take-most dynamics
“There is negative working capital associated with the business, and when you think about how the mature industries at the time were consolidating, it still is a winner-take-most type of a market.”
Assertion Not checkable as stated
First-time scale CEOs lead 70% to 80% of Vista acquisitions
“Probably 70, 80% of the companies that we buy is led by someone that this is the largest company either they've been in or the largest company they've ever led that day.”
Disclosure
Vista shares pooled carried interest down to junior associates and analysts
“We start off with our investment teams, for instance they're in a pool AXO structure, and we get wonderful incentives for them, which include ability to participate in the sale, carried interest with our associates and analysts, which I think is somewhat uniqu…”
Disclosure
Vista's 71-company portfolio generates 92% recurring revenue with 90% retention
“I look at my portfolio today, 71 companies, I think we're 92% recurring revenue, over ninety-plus percent in retention rates with our customer base, and the average customer you have for a decade or more, well, it creates a massive amount of certainty, especia…”
Disclosure
Vista directly funded Rocket Lawyer with $230 million in senior debt
“Our founder direct product. We just funded a deal run by a guy, Charlie Moore called, you know, Rocket Lawyer, a fantastic guy, two hundred thirty million in a first lien senior secured securities to enable him to grow his business.”
Assertion Not checkable as stated
Vista has completed over 500 enterprise software deals
“When we do our analysis, there's only probably 10% of the private equity firms out there in that space that have done half a dozen deals. We've done over 500 or so.”
Prediction Not checkable as stated
Market disappointments and regulatory changes will diminish SPAC attractiveness
“I think people are going to embrace them for some period of time, and then I think there's going to be some disappointments and potentially some regulatory changes, which we're starting to see the beginning of. Which I think are going to change the attractiven…”
Assertion Not checkable as stated
Late 1990s software industry lacked established standard operating procedures
“Well, it was a new industry, and because it was a new industry, there were very few, call it, operating procedures that were, how do you run a software company?”
Disclosure
Vista scaled software best practices using a McDonald's franchise model
“So I had the good fortune in that regard to actually evaluate hundreds and numbers of software companies, and one in particular I saw had some standard operating procedures that were used to actually make software companies efficient, and then took those and r…”
Disclosure
Vista Consulting Group headcount rivals the firm's investment team
“If you think about it, we've got almost as many people in Vista Consulting Group as we have in our investment team.”
Assertion Not checkable as stated
Vista accelerates quote-to-cash system rollouts to just a few months
“In some cases, the early days, it would take six to nine months to get those implemented. And today, in some cases, we're able to implement five or six of them in a couple of months across portfolio companies.”
Assertion Not checkable as stated
Over 400 executives have completed multiple tours across Vista portfolio companies
“I think it's 400, over 400 executives who've been on their second, third, fourth, fifth, sixth tour of duty at a Vista company.”
Disclosure
Vista offers AI nanodegrees to all portfolio company employees
“One of the few organizations that anyone in the companies can actually take in nanodegrees and artificial intelligence through our Vista University construct.”
Assertion Supported
Smith notes that 98% of global software companies remain privately held
“But the short answer here still, Ted, is 98% of software companies are private.”
Robert F. Smith