Calero Software and MDSL, two high growth software providers in the recurring Technology Expense Management space, announced plans to merge.  Oak Hill Capital will make a significant new investment—joining Riverside Partners, Calero's existing financial sponsor—as the lead investors in a growth re-capitalization of Calero and subsequent funding of the combination with MDSL.  Sumeru Equity Partners ("SEP"), MDSL's financial backer, will also continue as a significant investor in the combined business.  The closing of the merger is expected in late Q4 or early Q1 and remains subject to customary regulatory and other approvals. 

William Blair served as financial advisor and Kirkland & Ellis served as legal advisor to MDSL.  Choate served as legal advisor to Calero and Riverside.  UBS served as financial advisor and Paul Weiss as legal advisor to Oak Hill.  Transaction financing is being provided by Golub Capital. Financial terms of the transactions were not disclosed.

Calero and MDSL provide Enterprise Technology Expense Management (TEM), Market Data Management (MDM) and Managed Mobility Services (MMS) software and services to help enterprises manage their mission critical and highly complex recurring expenses across fixed line and mobile telecommunications, market data subscriptions, Internet of Things, SaaS and Cloud Infrastructure operations.  Together, after closing, Calero and MDSL will provide best in class solutions for their customers, as well as outstanding growth opportunities for their highly talented employees.  Once combined, the companies will have additional resources to accelerate their significant investments in product development and customer service innovation, including exciting growth areas such as IoT, SaaS and Cloud.

Charles Layne, CEO of MDSL, will lead the merged company as CEO. Scott Gilbert, currently COO of Calero Software, will serve as President of the merged companies.   The combined business will have over 800 highly talented employees, serve more than 3,500 customers and continue to operate from its existing facilities.

"We are incredibly excited to announce the combination of Calero and MDSL," said Steven F. Kaplan, General Partner of Riverside Partners, Calero's current Chairman.  "Both Charles and Scott are accomplished executives who bring the leadership, passion and industry experience required to take the combined company to the next levels of success.  I am also pleased to report that Joe Pajer, currently CEO of Calero, will remain highly involved with the business and will serve as a Board member of the new company, assisting with the efforts to combine these two companies."  Mr. Kaplan will continue to serve as Chairman of the merged companies.

CEO Charles Layne said, "During the past 25 years, both MDSL and Calero have focused on technology innovation and automation, which our clients have embraced and appreciated.  We want to assure all of our customers that they remain our top priority as we plan for the combination of these two businesses."  Mr. Layne added, "Calero and MDSL will continue to support all existing customer technology platforms and will maintain the outstanding customer service levels customers have come to expect from both companies, even as we add new capabilities and insights to our solutions set.  We believe that bringing together these two forward-thinking, customer-fixated organizations will drive bolder innovations, accelerated timelines, and more value for companies in managing technology expenses."

Adam Hahn, Principal of Oak Hill stated, "Technology Expense Management is a fast-growing space that addresses complex customer pain points and possesses attractive business model characteristics that match Oak Hill's targeted investment criteria.  Calero and MDSL are high-performing players within this space, with outstanding product features and excellent reputations for high quality service.  We are excited to partner with the Calero and MDSL management teams, employees, and with Riverside and SEP to lead a new chapter of continued growth."

Joe Pajer, Calero's current CEO, said, "With the completion of the combination of Calero and MDSL, I will be joining the Board of Directors and will continue to support Riverside and the combined company as we bring together two highly successful businesses.  I am thrilled at the opportunity for our employees and very excited for our new partnership with Oak Hill and SEP."

George Kadifa and Sanjeet Mitra, Managing Directors at SEP and MDSL Board Directors, said "MDSL and its management team have delivered incredibly strong performance and aggressively advanced product innovation in the TEM space since our partnership began in 2016. We are highly enthusiastic about a partnership with Oak Hill, Riverside and the Calero team and strongly believe this merger will enable the companies to continue to deliver best-in-class satisfaction and product leadership to customers while employing the most talented workforce in the industry."  As a part of the transaction, Mr. Mitra will continue to serve as a Board Director of the merged company.