Just this week, Turn/River Capital announced that they sold their portfolio company Redwood Software to Vista Equity and Warburg Pincus. While the press release doesn’t list the size of the deal, it was rumored to be around $2.5b. Turn/River originally invested ~$380m in the company in 2021 in what was likely a majority deal. Let’s take a deeper look at Redwood and the related M&A market.
Redwood Software’s exit
If you go to Redwood Software’s website as a layperson, you’ll likely have a difficult time understanding exactly what the company does. They use words like “automation” and “orchestration” and talk about lots of integrations and best-in-class security.
The problems that Redwood solves are for IT and finance departments of very large companies (they have 28% of the Fortune 500 as customers including Apple, Coca-Cola and General Motors). These aren’t the kind of problems that are easily relatable to a general audience, but that’s not to say they aren’t profitable problems to solve. Process automation is estimated as a $109b market and Redwood has been a Rule of 60[1] business for several years.
Diving deeper into the product, Redwood is an enterprise automation platform that has a large presence in the SAP and Oracle ecosystems (though it is not limited to those platforms). As an example, a company’s financial close process might involve multiple departments manually collecting, verifying, and entering data from disparate sources (e.g., spreadsheets, ERPs). Each step requires extensive back-and-forth communication between multiple humans and is prone to delays and user errors. With Redwood, this process is automated end-to-end: data is automatically gathered, verified, and reconciled in real-time. The system flags discrepancies for review, significantly reducing time spent on manual tasks, ensuring compliance, and allowing teams to focus on financial analysis rather than operational tasks.
But it’s not just financial close processes, Redwood has automations and integrations for everything from the general ledger (transactions of cash going in and out of the business, and to where) to employment (number of employees, how much they are getting paid) to IT (data processing, file transfer) and many things in between.
Even in a 10-person startup, it’s easy for these core systems to become unwieldy. At a larger company, they become extremely unmanageable and require teams of people to keep accurate and working. As a reminder, a company like General Motors (one of Redwood’s customers) has nearly $50b in revenue, 163k employees, over 300 direct suppliers and countless other nuances. Making sure there is a single source of truth and that it’s easily available to everyone is an extremely large undertaking.
Redwood Software’s products provide automations (individual tasks), orchestrations (groups of tasks) and related products so that managing these systems is faster, cheaper and more accurate for their customers. They connect to countless other software vendors so that users can automate tasks in groups that might come from different providers.
In comparison to the market, Redwood is often mentioned in the same breath as robotic process automation (RPA) giants like UiPath and Automation Anywhere. Redwood’s strategy also isn’t too far off from the AppFire’s of the world. AppFire primarily makes collaboration tools, which is a bit different, but also makes automation tools as well (and was similarly built on top of larger software company ecosystems).
[1] “Rule of 60” means that the growth rate summed with the profitability percentage is over 60. This is very strong and outperforms many public companies – historically a Rule of 40 company was the benchmark for a “good” software company.
M&A activity in process orchestration
As mentioned, Turn/River Capital invested in Redwood Software in 2021 after the company had been bootstrapped for several years. Over the course of Redwood Software’s history, they’ve made four acquisitions, two before Turn/River invested and two after they invested.
- Cerberus (Jan 2023) – Cerberus provides File Transfer Protocol (FTP) server solutions. FTP is typically used in organizations to securely store or transfer files. Cerberus was one of the highest-rated solutions in the industry and had built lots of automation tools (playing into Redwood’s core product theme) and compliance features.
- Tidal Software (Jan 2023) – Tidal is a job orchestration platform, meaning they coordinate across a number of cloud-based and on-premise software tools to help automate entire workflows.
- JSCAPE (Jan 2020) – JSCAPE, similar to Cerberus, is a file transfer solution for IT departments. The main difference lies in the technical aspects of delivering the service: JSCAPE primarily uses managed file transfer (MFT) while Cerberus uses FTP. MFT is often regarded as more secure (using encryption before sending files) and transparent (easier to view file transfers) compared to FTP.
- Advanced Systems Concepts (Nov 2019) – Advanced Systems Concepts (with their main product ActiveBatch) is also a job scheduling and workload automation platform. They orchestrate automations across a number of internal processes with dozens of integrations.
Redwood Software isn’t the only one making acquisitions in this space, however. Here are a few other notable deals recently from both larger strategic companies and private-equity backed platforms.
As mentioned, UiPath could be considered one of their closer competitors. While they haven’t made that many acquisitions, they have added a few innovative products to their portfolio in the past few years. In March of 2023, they purchased ProcessGene, an Israel-based provider of government, risk management and compliance (GRC) data, seemingly to a largely EU-based customer base. In July of 2022, UiPath acquired Re:infer. Re:infer had previously raised around $12m in venture capital over several rounds, and provided AI-based tools that helped organizations analyze internal conversational data for meaning and emotion. You can imagine how both of these products complement UiPath’s core business of process automation.
Automation Anywhere might be another large comparable company to Redwood Software, though they haven’t done any acquisitions in the past three years.
Going a bit smaller, there are a few platforms that have recently been backed by private equity or growth equity investors. Webcon is a low-code platform based in Poland similarly designed to automate business processes and workflows for organizations. They were acquired by MCI Capital, a Polish private equity fund focused on digital transformation.
Back in the US, ProcessMaker is another platform that has received more capital and attention lately. Founded in 2003 in North Carolina, ProcessMaker offers a business process automation (BPA) platform that helps organizations streamline workflows and automate tasks across departments. They took $45m in capital from growth equity fund Aldrich Capital Partners in 2021 and have been busy with acquisitions since then. In September 2022, they acquired Doculayer, bringing best-of-breed document processing to the product portfolio. Then in April of 2024, they added Workfellow. Workfellow had AI tools that analyzed a number of tasks and processes in order to find the more efficient path to complete the job and boasted a wide number of integrations.
Another interesting player in the space is SMA Technologies. They are similar to the others listed as they provide a workload automation platform that helps businesses automate complex, repetitive tasks across systems and applications. The difference is that they focus specifically on banks and credit unions, which often have unique compliance and security requirements. SMA was purchased by private equity fund ParkerGale in 2020 and received additional investment from Vista Equity Partners in 2022.
A few other substantial companies I found in this space include Stonebranch (IT automation, raised in 2024 from EMH Partners), Pipefy (AI-powered automation, Series C company backed by SoftBank) and EPSoft (process automation, bootstrapped) though the list of companies in this industry is vast. It would not surprise me if there was a lot of M&A activity that continues in process automation & orchestration as it seems to be one of key beneficiaries of AI.
