funding (Source Freeimages.com/Tracy OlsonAgiloft has announced that KKR is to take a majority ownership in Agiloft. The investment was made through its Next Generation Technology III Fund. FTV Capital, which invested $45 million in 2020 has also made a further investment in Agiloft. In addition, JMI Equity has also joined the funding round as a new investor.

While this will probably provide an exit for the founders, KKR has announced that it will also launch a broad-based employee ownership program. It will allow all employees to have a share of ownership in the company.

This is a strategy that KKR has used elsewhere, for example, at C.H.I. Overhead Doors, which KKR acquired in 2015 and sold in 2022 for $3 billion, employees received annual dividends and received an average of $175,000 when the firm was sold. Employees who joined the scheme in 2015 earned substantially more.

Since 2011, when KKR first started the shared ownership scheme within its portfolio, it has awarded billions of dollars to over 100,000 non-senior management employees across more than 45 portfolio companies. In 2022 KKR joined more than 20 organizations in becoming a founding partner of Ownership Works. Ownership Works ia a non-profit created to support public and private companies transitioning to shared ownership models. KKR believes that when employees have a stake in the company, it helps build a strong culture and better results.

Huge investment

Compared to its rivals, Agiloft has taken some time to obtain new funding. However, the change of ownership is a major change for the firm. It can look forward to a future where it can invest in growth for its AI-powered contract management platform.

The investment will help the company invest in customer success, product development and market expansion. The details of what it will invest in were not detailed in the release.  Agiloft also did not release the amount of the investment, nor a valuation figure for the company.

Eric Laughlin, CEO of Agiloft
Eric Laughlin, CEO of Agiloft

Eric Laughlin, CEO of Agiloft, commented, “I am enormously proud and humbled by what we have been able to accomplish at Agiloft. While the business has grown significantly, we have always focused on and maintained our number one differentiator: customer satisfaction and retention, which is predicated on our uniquely agile solution, reliable implementation success, and human-centric approach to contracting. This new investment from KKR and JMI Equity and continued support from FTV Capital serve as a testament to the caliber of our team’s ability to provide and deliver differentiated world-class products and services to our customers.”

KKR includes nearly 60 information technology companies within its portfolio. Including firms such as BMC, Cegid, Exact, MYOB, OneStream, and Outsystems. It has experience in helping organisations succeed worldwide.

Jimmy Miele, Director, Tech Growth at KKR, commented, “As businesses increasingly look for efficient ways to ensure regulatory compliance, realize cost efficiencies and manage complex workflows, Agiloft has differentiated itself by providing a simple, one-stop solution to meet its customers’ needs. We are deeply impressed by Eric’s leadership and the rest of the Agiloft team, and we look forward to working together to capture additional opportunities in the market.”

Stronger in partnership

What is interesting about this announcement is the evolution of how KKR invests in its portfolio companies. With Agiloft, the deal includes provision for FTV to continue its investment in the firm. Actually raising its shareholding with a further investment. It has also brought in another investor, JMI Equity, to work alongside it. It will mean that Laughlin will have the support and advice from three different investors. They include LTV Capital, who helped bring Laughlin into the company as CEO.

Alex Mason, Partner at FTV Capital, “Since FTV’s initial investment in 2020, Agiloft has driven impressive growth by delivering a truly unique no-code platform to a quickly growing customer base globally. The CLM market, while still young, represents a multi-billion dollar opportunity, and we look forward to working with KKR as we continue to support Agiloft in fueling expansion and sustaining its notable leadership in workflow automation.”

Enterprise Times: What does this mean?

There is little surprise that Agiloft would be seeking funding this year to propel its growth. However, KKR taking majority ownership shows that it believes that it can do far more if it has better control over future investments by the firm. What is missing from the announcement is any change in the composition of the board. KKR will no doubt have more than one representative and what the plans are for both organic and inorganic growth through acquisitions.

Once the dust has settled on the acquisition, expect to hear more from Agiloft, either through recruitment, more sales and marketing or acquisition announcements. There are several smaller CLM providers and adjacent technology companies that might help the firm accelerate growth. It will be interesting to see how this plays out. Historically, KKR grew Epicor quickly through numerous acquisitions before it sold it in 2020. Will it take a similar approach and see consolidation in the CLM market?

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