Absorb Software to be acquired by US private equity firm at $630 million CAD valuation

Absorb Software office

Calgary edtech Absorb Software is set to be acquired by New York’s Welsh, Carson, Anderson & Stowe (WCAS), in a deal that is said to value Absorb at over $630 million CAD ($500 million USD).

WCAS has entered into a definitive agreement to purchase the e-learning and performance management software company from Boston-based growth equity firm Silversmith Capital Partners. A company spokesperson declined to disclose the purchase price.

“The current market demand and long-term outlook for best-of-breed eLearning solutions is extraordinary.”

Founded in 2003, Absorb offers cloud-based learning management system (LMS) software to over 23 million users at more than 1,400 organizations in 34 countries. The Alberta-based company has offices in London, Dublin, Tampa, Boston, Salt Lake City, and Sydney.

Absorb’s e-learning and performance management tech helps organizations train, retain, and manage employees and external stakeholders. The firm provides its software to businesses, governments, healthcare providers, educators, and non-profit organizations.

The transaction is expected to close in the second quarter, pending regulatory approval. Following the completion of the deal, Mike Owens, Absorb founder and CEO, and other members of the company’s management will remain substantial shareholders in Absorb. Absorb plans to use the fresh funding to accelerate its growth by investing in product innovation and strategic mergers and acquisitions.

“The current market demand and long-term outlook for best-of-breed eLearning solutions is extraordinary,” said Owens. “This new investment speaks volumes to the increasing value of Absorb’s platform.”

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“Absorb is led by a strong management team with a highly differentiated LMS platform that has been changing the way organizations deploy training and engagement with both internal and external stakeholders,” said Ryan Harper, general partner of WCAS, which focuses primarily on tech and healthcare. “We believe [Absorb] is uniquely positioned to continue its rapid market share capture and product leadership to establish [itself] as the clear next-generation leader in LMS.”

WCAS is set to purchase Absorb from Silversmith, which invested $59 million in Absorb in 2017 in the Calgary startup’s only round of funding to date, according to Crunchbase.

In 2020, Absorb said it saw record growth, reaching $50 million in annual recurring revenue, as the firm grew its customer base by 167 percent year-over-year. Absorb attributed these increases in part to the rise of remote work instigated by COVID-19.

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The proposed deal is one of two recent and significant investments in Canadian software companies by United States-based private equity firms. Earlier today, Luminate Capital Partners announced plans to acquire a controlling stake in Kitchener-Waterloo’s Axonify for $313 million CAD.

Last month, Absorb launched Absorb Intelligence, a suite of artificial intelligence-based products that aim to allow administrators to automate tasks, help learners access intelligent course recommendations and search functions, and automatically transcribe and timestamp video lessons using natural language processing.

In August, Absorb acquired Quebec-based Koantic, a digital course authoring tool, for an undisclosed amount. Absorb later integrated Koantic into its product suite, renaming it Absorb Create, which the company launched in December. Since 2019, Absorb has acquired three other edtech companies: Torch, LMS, eLogic Learning, and ePath Learning.

Photo courtesy of Absorb Software

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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