Software quality engineering company Tricentis confirmed that private equity firm GTCR has agreed to invest $1.33 billion in the Austin, Texas-based business, which provides software testing automation and software quality assurance products to dozens of banks around the world.
The agreement, which values Tricentis at a record $4.5 billion, was approved by its majority shareholder, software investor Insight Partners, as well as Tricentis’ board following a review of strategic alternatives, the firm said.
Under the deal, Insight Partners and Chicago-based GTCR will work together with equal representation on the board of directors.
Mark Anderson, managing director and head of technology, media and telecommunications at GTCR, said his firm agreed to the record investment since “Tricentis has established itself as a leader in software quality testing through its product suite and the value it provides.”
Founded in 1980, GTCR is a private equity firm that is focused on investing in companies in financial services, business, and technology.
Since its inception, the firm claims to have invested more than $25 billion in over 280 companies. The investor is based in Chicago with offices in New York and West Palm Beach.
Tricentis chief executive officer Kevin Thomson echoed Anderson’s sentiment by saying that the “investment simply recognises the company, product portfolio and market opportunity that we have created here at Tricentis.”
Tricentis was founded in 2007 in Vienna by Franz Fuchsberger and Wolfgang, with Insight Partners taking majority ownership in 2017.
Today, Tricentis is a U.S. corporation headquartered in Austin, Texas, with a total of 26 offices globally. The company claims it is on course to finish 2024 with close to half a billion dollars in annual revenues and growth of approximately 27% YoY.
Deal rumours
The capital allocation comes as rumours about a potential sale of the company continue hit the market in recent markets.
Investment firm Insight Partners was reportedly considering selling Tricentis in a deal that valued the company at up to $4 billion. This week’s investment slaps a value on Tricentis that is even $500 million more.
In September, Insight Partners instructed Evercore to source for potential candidates to take over Tricentis, generally considered as one of the biggest players in AI-powered automated software testing.
Analysts said at the time that the firm, which has around 2,500 clients worldwide, including a range of banks and financial services firms, could change hands for close to $4 billion. The firm has revenues of around $450 million and close to $86 million in EBITDA.
The deal rumours took off only shortly after the firm bought SeaLights, a SaaS-based, software quality intelligence platform.
The latest acquisition added to a hyperactive year for the Texas-based QA multinational, with various product launches, multiple acquisitions and a recent strategic partnership in 2024 alone.
At the same time, under CEO Kevin Thompson, the company has set out ambitious plans to push further into the US market.
SeaLights, which was founded in 2015, provides a host of large banks, financial services firms and insurance players with metrics, traceability, tests and insights meet quality gates and deliver software.
The firm uses agents to map code to tests and evaluate code that has changed, turning to machine learning (ML) to identify quality risks during software releases.
This shift-left capability enables software development teams to focus on the minimum number of functional tests, thereby saving time and speeding up their release delivery.
“In today’s complex, fast-moving IT environments, AI-powered quality intelligence is an absolute game changer.”
– Kevin Thompson
This was one of the main reasons why SeaLights stands out and got the attention from Tricentis CEO Thompson.
He explained that “the additional capabilities of SeaLights further extend the dominance of our comprehensive quality intelligence solutions to a wide array of applications and environments.”
Thomspon claimed his firm can now provide customers with AI-enabled quality intelligence beyond SAP environments and into both custom and packaged applications.
This includes test impact analysis, quality risk management, root cause analysis, and support across all programming languages.
The deal was Tricentis’ second acquisition in the past twelve months, following the purchase of Waldo in July 2023.
Financial details of that transaction had not been disclosed but the takeover was valued at around $150 million.
UPCOMING EVENTS
QA FINANCIAL FORUM LONDON: RECAP
Last month, on September 11, QA Financial held the London conference of the QA Financial Forum, a global series of conference and networking meetings for software risk managers.
The agenda was designed to meet the needs of software testers working for banks and other financial firms working in regulated, complex markets.
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