Fortissimo Capital sells 50% of Priority Software holdings for $250 million

Global growth private equity firm TA Associates announced on Monday that it was acquiring 50% of Israeli ERP (Enterprise Resource Planning) software company Priority Software Ltd, one of Yuval Cohen’s Fortissimo Capital’s leading portfolio companies. Though the terms of the deal were undisclosed Calcalist has learned that the acquisition was based on a company valuation of $250 million. The fund had initially entered negotiations about investing in Priority a year ago, but the deal failed to materialize. Talks resumed in recent weeks, this time at an expedited pace, which led to the deal being finalized in recent days.

The international fund completed its first deal in Israel back in 2006, when it acquired 65% of medical aesthetic company Alma Lasers for $90 million. The deal reflected a company valuation of $140 million and it was sold in full in 2013 for $240 million.

TA Associates has raised $26 billion to date, completed 265 acquisitions, and led 120 companies to go public. TA invests in profitable, growing companies as either a majority or minority investor and operates out of offices in Boston, Menlo Park, London, Mumbai, and Hong Kong.

Priority, led by CEO Andres Richter, provides comprehensive ERP software for medium to large organizations. It has offices in the U.S., the U.K., Belgium, and Israel and a global network of business partners. The company has 75,000 clients in 40 countries and it operates in an industry where clients tend to maintain loyalty to the service provider.

Priority dominates the local Israeli market, with 10,000 clients. Fortissimo led it to expand its operations abroad, which currently makes up 40% of its revenue.

Priority is an incarnation of Eshbal Technologies, which was acquired by Fortissimo in 2013 for NIS 192 million (approximately $70 million at the time). Fortissimo paid NIS 100 million from its own capital and financed the remainder with bank guarantees. Fortissimo has since then paid off the debt and issued $57 million in dividends.

Priority’s value has multiplied fivefold since then and it has carried out several acquisitions of its own. In 2018, it acquired the Belgium-based Optimize Group, which develops and sells ERP solutions to 1,000 organizational clients for roughly 8 million euros. Prior to that, it had acquired U.S.-based Acclivity, the ERP activities of Israeli company Monitin Information services, and American ERP Consulting company Performa Apps.

Priority currently employs 225 people, 180 of them in their Jerusalem offices. Since it as purchased its revenues have increased fourfold.

“Priority Software is considered by many to be a market leader in the Israeli ERP space, and we believe that the company has significant untapped potential,” said Stefan Dandl, a Senior Vice President at TA Associates who has joined the Priority Software Board of Directors. “Additionally, there is a significant opportunity for Priority Software to expand internationally in its addressable market through acquisitive and organic growth. We look forward to partnering with the Priority Software and Fortissimo teams in these growth efforts.”

“As a firm focused on creating value from growth, Fortissimo is proud to have partnered with the Priority Software team and been a part of the company’s rapid growth over the last six years,” said Yuval Cohen, Managing Partner at Fortissimo Capital. “We continue to believe in Priority Software’s growth potential in Israel as a result of its leadership position, loyal customer base, and superior technology and its potential to continue driving growth worldwide.”