Reference no: EM132189030

Quorum Business Solutions Inc., a software provider to the energy industry, is betting a rebound in oil prices will help it land a new owner.

The private equity-backed company is working with investment bank Credit Suisse Group AG to explore a possible sale, according to people familiar with the situation. Quorum is timing it with recovery of the oil and gas sector after years of sluggish activity.

Quorum is one of at least two dozen software providers in the energy sector that private-equity firms took a stake in between 2012 and 2014, before oil prices plummeted, according to a data provider PitchBook Data Inc. Many of those companies have reached a stage at which their investors would typically look to exit. Industry experts say with prices of Brent crude, the global benchmark, up more than 19% so far this year, valuations for these companies have improved, encouraging more of them to explore sales.

Energy-technology companies have sprung up as the oil-and-gas industry expanded, providing software for land management, life-cycle reporting of wells, accounting and tracking of active oil rigs. The rebounding sector could mean that more energy companies seek their services to help manage increasingly complex operations.

Quorum, which offers software products including those that support marketing, transportation and storage of pipelines, is projected to generate roughly $43 million in 2018 full-year cash earnings before interest, taxes, depreciation and amortization, according to people familiar with the sale, citing marketing documents. Both private-equity and corporate buyers are looking at the company, according to another person familiar with the situation.

Last month, Insight Venture Partners sold much of its stake in oil and gas software company Drilling Info Holdings Inc. to fellow private-equity firm Genstar Capital in a deal that valued the company at roughly $1 billion, according to people familiar with the sale. Insight originally bought a majority stake in Drilling Info in 2012 for $165 million. The company, which was previously backed by a half a dozen firms, was marketed to buyers on more than $60 million in 2018 Ebitda.

Private-equity interest in energy-focused software deals has picked up after a more than two-year lull. So far this year, private-equity firms have backed five deals in the sector, putting the industry on pace to exceed the eight deals done in 2017, according to PitchBook. Through June 28 this year, the sector has seen roughly $340 million worth of deals.

Technology-focused buyout shop Silver Lake invested in Quorum in 2014 in a deal that valued the company at $310 million. The firm initially financed its investment using equity from its core buyout fund and from Silver Lake Kraftwerk, a growth capital vehicle dedicated to backing tech businesses in the operations, energy and resources industries.

Since Silver Lake’s investment, Quorum has become an active acquirer. In April, the company announced it had entered into an agreement to buy Entero Corp, a software provider for the upstream and midstream sectors. In September of last year, it acquired WellEz Information Management LLC, a cloud-based well life cycle analytics provider.

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