Private equity firms have had little to celebrate for quite some time. The record-long phase of cheap money did not only bring advantages to the industry. While low-interest rates facilitated credit-financed takeovers, financial investors also faced a rush of yield-hungry institutional investors pouring billions into the market, creating investment pressure that even established funds struggled to meet. Consequently, the investment process for lucrative assets sometimes resembled a frantic dance around the "golden calf", leaving some investors dizzy and less enthusiastic about leveraged buyouts.

The interest rate turnaround dealt another blow to the industry, adding exit pressure to investment pressure. As interest rates rose, the flow of M&A deals declined, and the interest-sensitive stock market became an unviable exit channel.

Taking advantage of the decline in stock prices, Silver Lake's investment in Software AG appears as a rare "highlight" in a gloomy environment. The US investor, specializing in technology companies, entered the company's capital through a convertible bond. They seized the opportunity presented by the decline in the stock price of the long-standing but poorly managed company for a takeover followed by a going private. Financial investors have learned not to offer any vulnerabilities to hedge funds and other troublesome activists by not linking their tender offers to any minimum acceptance thresholds. Nevertheless, to ensure the success of the investment, Silver Lake resorts to tactics that evoke memories of the much-criticized invasion of the "locusts" after the turn of the millennium.

The originally not insignificant free float of Software AG now witnesses the rapid dismantling of the once second-largest German software company in record time from a powerless spectator role. This is due to a cleverly orchestrated collusion between Silver Lake, the Software AG Foundation as a major shareholder, and, last but not least, the management and supervisory boards. The latter lacked independence and transparency in the interest of the company when they quickly rejected a counteroffer from Rocket Software, which is controlled by Bain Capital. This was done with the casual remark of a lack of transaction security and advanced strategic agreements with Silver Lake.

In the takeover offer, the US investor explicitly committed to support the growth of Software AG, especially by strengthening cloud-based businesses. However, with the consent of the boards, Silver Lake quickly proceeded to sell significant cloud-based areas, even before the completion of the delisting offer to the completely overrun free float. This doesn't give the impression of "corporate development" that private equity often proudly claims. But the behavior suspiciously resembles the rough "financial engineering" through which the industry earned its locust label. With a sales proceeds of 2.1 billion euros for the businesses sold to IBM, Silver Lake almost recovers the purchase price for the entire company in one fell swoop.

While it is not entirely ruled out that rival Bain Capital would have also made drastic changes in the case of a successful counteroffer, the planned acquisition through its portfolio company Rocket Software suggests a more buy-and-build approach. For a foundation-owned company that generated enough cash flow for solid dividends despite growth weaknesses, one would have expected the management and supervisory boards to at least more thoroughly examine this possibility. Even if only because the offer from Silver Lake's rival was ultimately over 150 million euros higher. Instead, those responsible must question whether they sold Software AG almost at a clearance sale price. The stock price, for which Silver Lake offers 32 euros, was recently almost at 37 euros.