Vista Equity Partners' Acquisition of Model N Supported by $1B Debt Deal

Oak Hill Advisors Leads $1 Billion Debt Arrangement for Vista Equity's Model N Acquisition

Oak Hill Advisors is spearheading a consortium of private credit lenders to organize $1 billion in debt to facilitate Vista Equity Partners' acquisition of Model N, a revenue management solutions company. The financing group includes prominent entities such as KKR & Co., Morgan Stanley’s direct lending arm, and New Mountain Capital. The debt is priced at 5 percentage points above the Secured Overnight Financing Rate, offered at a discount of 99 cents on the dollar, underscoring private equity's sustained interest in the technology sector. Vista's all-cash acquisition of Model N is valued at approximately $1.25 billion, showcasing the active involvement of private credit firms in leveraged buyouts and their crucial role in the market.

Key Takeaways

• Oak Hill Advisors leads a consortium in arranging a $1 billion debt package for Vista Equity's acquisition of Model N.
• Private credit lenders play a strategic role in leveraged buyouts amid intense competition and fluctuating interest rates.
• Vista's all-cash purchase of Model N for $1.25 billion exemplifies private equity's keen interest in the tech sector.
• Private credit lenders, including Oak Hill Advisors, demonstrate substantial liquidity for financing leveraged buyouts.
• Vista's $1.25 billion acquisition of Model N underscores private equity's interest in the technology sector.

Analysis

The Oak Hill Advisors-led consortium's arrangement of $1 billion for Vista's Model N acquisition accentuates private credit's pivotal role in leveraged buyouts, reflecting sustained interest in technology and ample liquidity in the lending market. Contributing factors encompass low interest rates and the expansion of the technology sector. Immediate implications involve Model N's change in ownership and accrued debt, with long-term effects potentially altering the landscape of revenue management solutions. Key stakeholders impacted include Oak Hill Advisors, Vista Equity Partners, Model N, and other private credit lenders. This development may pave the way for increased private equity investments in technology and consolidation within revenue management solutions.

Did You Know?

• Vista Equity Partners: A distinguished private equity firm specializing in investing in software, data, and technology-enabled businesses. Vista focuses on acquiring and nurturing technology companies to drive innovation and generate value for its investors.
• Model N: A provider of revenue management solutions catering to the life sciences and high-tech manufacturing sectors through cloud-based software. Model N aids clients in optimizing pricing, contracts, and revenue streams to enhance profitability and competitiveness.
• Private credit lenders: Financial institutions or funds extending debt financing to companies, typically in the form of leveraged loans or mezzanine debt. They have gained prominence in the leveraged buyout market by offering flexible financing solutions and capital in scenarios where traditional banks may be hesitant to lend.