When MarketWatch first started reporting on markets and investing, there was a general consensus among the biggest Wall Street firms that private equity and software didn’t mix. The billionaire buyout barons didn’t think lenders would ever extend them credit against assets that boiled down to lines of code. Even if they could find financing, the risk of investing in something that could be made obsolete by a programmer working in a garage seemed too great.
As MarketWatch turns 25, we wanted to ask Bravo what’s next for software and private equity. Here are his lightly edited comments: You will be reading about how private equity is reshaping the software industry. Our industry runs software how it’s supposed to be and does a phenomenal job in turning these companies — as great innovators — [into also producing] for their shareholders — versus great innovators that lose money for their shareholders everyday in the public markets. This is a long-term trend. This has been creeping up and up and up.
We do much better in a down market. If you look at our history, our best times by far were in the years 2000 and 2008. It’s not even close. Let me put it this way: Venture capital and some growth equity is about momentum. You buy high and sell higher. In a forgiving environment that goes on. We don’t do that. We take a company, we try to buy it at a fundamental price, and we create earnings that did not exist before.
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