Clearlake Capital Group has successfully completed the leveraged buyout of Quest Software, acquiring the asset from the preceding financial sponsor, Francisco Partners. The transaction was structured as an LBO and financed through the broadly syndicated loan market with first and second lien debt tranches. Leverage metrics were highly aggressive, reaching approximately 7.0x through total debt, a capital structure facilitated by robust demand for leveraged loans from CLOs and institutional accounts. This acquisition represents a highly strategic platform investment for Clearlake Capital, designed to execute an accelerated buy-and-build strategy within the fragmented infrastructure software sector. The core thesis revolves around operationalizing Quest’s recent pivot toward growth-oriented acquisitions and expanding its cybersecurity capabilities. Clearlake intends to leverage its proprietary O.P.S.® value creation framework to integrate dilutive add-ons and drive margin improvement. Furthermore, the sponsor aims to capitalize on secular trends demanding application migration, cloud deployment, and advanced data protection.

QUEST SOFTWARE, which reported an EBITDA margin of LOGIN in 2022, is valued in this transaction at an EV/EBITDA multiple of LOGIN, representing a LOGIN discount to the average currently observed in the TMT (Tech, Media, Telecom) sector (13.6x).

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