The software industry has matured.  With over $200 billion spent annually on business software, companies have come to depend on software to run all aspects of their businesses.  However, many software segments have been deeply penetrated and market growth has slowed as these segments have matured.  As historically seen in other industries, maturity begets consolidation.  This  consolidation is well underway with large software companies growing larger by acquiring other medium and large software companies.

This consolidation has largely bypassed the smaller software companies because they do not offer a meaningful enough revenue increase for large companies to pay attention to.  Additionally, traditional exit opportunities for small software companies such as the stock markets are no longer available due to the costs, expectations and liabilities of being public.  With over 11,000 private companies under $20M in revenue, there remains hundreds of fantastic companies with great inherent value.

SecondWave Software has been established to capture the value in these small companies.  Working in conjunction with CIBC Bank, SecondWave acquires these companies and provides liquidity to existing investors.  SecondWave then works with local management to optimize and add additional acquisitions in order to grow each company to a critical mass.  Unlike financial acquirers, SecondWave Software is led by two veteran software executives who have strong operational track records and have experience executing and integrating acquisitions.