FORG - Antitrust regulator focus on private equity deals creating challenge Orlando Bravo says

2023-05-02 13:36:39 ET

A new antitrust regulator focus on private equity deals is creating challenges for the industry, according to Orlando Bravo, chief of tech-focused PE giant Thoma Bravo.

"That's a big challenge to the industry and to private equity," Bravo told CNBC in an interview on Tuesday. "It used to be that software is perceived as such a competitive and dynamic space, that you will have the freedom to do M&A because competition comes from everywhere."

Bravo's comments come after Dept. of Justice antitrust Chief Jonathan Kanter last May said he plans to take a stricter stance on private equity firms acquiring companies. Thoma Bravo's own deal to acquire ForgeRock ( FORG ) has seen an extended Federal Trade Commission review possibly on concerns about concentration in the identity management sector after Thoma Bravo made other deals in the sector.

"In many cases you cannot pursue the targets that both the seller and the buyer want to transact," Orlando explained. "It's not even whether if the deal will go through it's that in many cases sellers do not want to go through that exploratory process of waiting a year to see if the deal will close."

The Financial Times reported last month that while Thoma Bravo offered to pay more for Qualtrics ( XM ) than PE firm Silver Lake agreed to in an $18.15 a share buyout, the deal was likely thwarted because of concerns about a possible lengthy review from U.S. antitrust regulators. Thoma Bravo wanted to buy Qualtrics and merge it with Medallia, a rival that it already owns.

"It's making the discussions with those targets a lot more complicated," Bravo added in the interview. "It's taking a lot longer and people have to be a lot more thoughtful about what they're engaging in."

Orlando also said the current financing markets are "really really expensive."

More on ForgeRock

• ForgeRock enters timing agreement with DOJ related to sale to Thoma Bravo ForgeRock falls as shareholders approve sale to Thoma Bravo

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