With three subscription software firms—Ping Identity, Marketo and Demandware—changing hands in recent weeks, it seems a long-awaited consolidation in subscription software is in full swing. But instead of other software companies, it’s private equity firm Vista Equity Partners driving the dealmaking, buying Ping and Marketo for a total of $2.4 billion.
Vista appears to be repeating previous efforts to roll up fragmented parts of the subscription software industry, a strategy it pursued several years ago among firms that make event and meeting planning software. It could explain why Vista is paying a premium for the companies it is buying. And it shows how private equity can be a viable exit pathway for venture-backed firms that are long in the tooth but aren’t profitable enough to go public in the current market environment, like DocuSign or MarkLogic.