PE Due Diligence: Portfolio Software Spend

Key points

• A mid-market private equity fund with $2.8B in assets under management held 12 portfolio companies spanning B2B software, business services, healthcare services, and industrial technology sectors.
• Across the portfolio, total annual software spend had grown to $148M, a figure that had increased significantly following several add-on acquisitions and had never been systematically benchmarked.
• At the fund's typical exit multiple, $1M in annual recurring software savings added approximately $5M in terminal enterprise value.
• The $22M in annual savings ultimately identified represented over $110M in potential exit value creation, material at any fund size, but especially significant for a mid-market fund where each portfolio company's exit outcome directly drives fund returns.
• Oracle accepted a pricing reset based on current headcount and scale benchmarks, reducing annual Oracle spend by $2.8M. The company's CEO reported that the negotiation "took one meeting" once they had the benchmark data showing the scale mismatch quantified in dollar terms.
• SaaS Portfolio · Healthcare $8M Saved: Healthcare SaaS Portfolio Regional health system benchmarks 47 vendors. $8M annual savings identified.Oracle · Retail $12M Saved on Oracle Renewal Fortune 500 retailer uses benchmark data to save $12M on Oracle Database renewal.8 Case Studies Published Oracle, Microsoft, AWS, SAP, SaaS portfolio, PE due diligence, AI platforms, cybersecurity.