Software Firm Sale Bolsters Manhattan Beach Private Equity Portfolio

Manhattan Beach private equity firm K1 signed an agreement with European software firm Nemetschek Group to acquire GoCanvas in a deal valued in excess of $750 million.

Founded in 2008, GoCanvas had annual recurring revenue of $67 million in 2023 and was acquired for about an 11.5x multiple, implying a sale price above $750 million. K1’s investment in the company of $150 million came from its fourth fund, K4, which it raised in 2018. At the time, GoCanvas was venture backed and operated by the company founder. K1 subsequently acquired other businesses that were added on to GoCanvas.

The acquisition comes at a time when private equity funds have faced challenges from a slowdown in merger and acquisitions activity due to higher interest rates and lower valuations. Nevertheless, K1, which has assets under management in excess of $14.9 billion, has had a record level of distributions in the last six months.

The strategic acquisition of GoCanvas aligns with Nemetschek’s subscription and SaaS products designed for the architecture, engineering, construction and media industries. GoCanvas has more than 300,000 active users for its software that digitizes traditional paper-based processes, simplifies inspections and maximizes compliance.

“This partnership will accelerate our growth and development, allowing us to offer our solutions to a wider range of customers,” said Viyas Sundaram, GoCanvas chief executive, in a statement.

The acquisition is expected to close in the summer of 2024, pending regulatory approvals and closing conditions. Moelis & Company LLC served as the financial advisor, and law firms Kirkland & Ellis and Morris, Manning & Martin served as legal advisors to GoCanvas for the transaction.

Meanwhile, K1 is actively working to acquire a database platform operator MariaDB plc, a publicly traded company on the New York Stock Exchange. It tendered an offer at 55 cents per share in February, which values the company at $39.5 million. The backers of MariaDB raised roughly $230 million in venture funding over several years and eventually went public in December 2022 via a special purpose acquisition company, but it’s valuation has fallen from an opening day market cap of $445 million and the company was in danger of being delisted before K1 made its offer.