Allvue is expanding its repertoire of products with its acquisition of PFA Solutions, which offers software for carry and compensation management.
The service provider, which mainly offers fund accounting solutions, pursued PFA to better serve GP chief financial officers, Allvue chief executive officer Marc Scheipe told Private Funds CFO.
“They have other needs as well, and one of the needs we uncovered – particularly with more scaled private capital businesses – is this need which ends up being pretty complex for carry distribution,” he noted.
The combination closed just before the holidays. Scheipe declined to disclose the deal’s consideration but said the transaction entailed a complete buyout.
PFA’s primary offering is called FirmView, which is for carry and compensation.
FirmView allows for sponsor finance departments to handle steps such as allocation, vesting, forecasting and processing distributions. Employees can also use it to access a portal that displays details for their carry allotments.
The acquired firm serves sponsors in private equity, venture capital and private credit.
Scheipe said that PFA was a good target because of its customizable and automated platform. And he pointed to the track record of PFA co-founder Richard Change, a Carlyle alum who has led the company for a dozen years.
“We started engaging in dialog and quickly we said, ‘look, we want to combine forces,’” Scheipe said.
Change previously served as Carlyle’s chief application architect and brings more than two decades of experience in technology.
The deal is notable in another respect: Scheipe said it’s Allvue’s first acquisition since it was formed in 2019 via the merger of Black Mountain Systems and AltaReturn.
“We’ve been very, very selective,” he said about M&A.
The deal is meant to be complementary for the companies, with no departures slated.
“Richard and his team will be there,” Scheipe said. “There’s no planned mass cost reductions. That’s not what this is about. This is about accelerating growth, adding fuel to the engine so that it can go faster and further.”
Phased integration
The combined company will work on cross-selling products over the near term, Scheipe said. The cross-selling will involve promoting carry software to existing Allvue customers, along with making Allvue’s software available to PFA customers.
The tie-up is intended to help make GPs’ workflows more efficient.
In announcing the deal, the firms noted that the carry software lets customers “eliminate reliance on error-prone spreadsheets.” And the pair noted that customers will be able to automate their compensation guidelines compliance.
But don’t look for Allvue to cross-sell for its own sake. Rather, Scheipe said it will defer to companies based on their interest.
And the CEO noted that he wants each offering to be strong on its merits.
“I very much believe and understand that each of the individual products and solutions need to stand on their own, so-called best of breed,” he said.
Allvue also has a chance to sell carry software to fund administrators, which Scheipe said is something the company will consider.
“It’s actually an opportunity,” he said. “PFA has not really sold into fund administrators, really in a robust sort of way.”
The firm is eyeing new capabilities over the long term. For example, Scheipe mentioned adding a scenario analysis feature to carry management, which would enable customers to explore hypothetical arrangements.
