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Calgary’s Absorb Software has been sold to a U.S. private-equity firm in a deal valuing the company at more than US$500-million, the latest transaction in the surging local tech sector to bring some good news to the blighted oil-patch capital.

Private-equity firm Welsh, Carson, Anderson & Stowe acquired the company from Boston-based Silversmith Capital Partners, which previously backed Absorb with a US$59-million investment in 2017.

Absorb’s founder and chief executive, Mike Owens, and other members of the management team will retain a “substantial” stake in the learning-software company, according to a news release.

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“The learning-management space has been very hot and actively engaged as a result of the pandemic and the changes to how people work,” Mr. Owens said in an interview. “So, that means it’s been a good time to emerge as kind of a new winner in the space.”

Absorb, which provides cloud-based software to governments, health care providers, educators and non-profit organizations, saw record growth last year. The company serves 1,400 clients globally, including Sony Group Corp. and Johnson & Johnson, and cleared US$50-million in recurring revenue in 2020, while increasing new sales by 30 per cent over the previous year.

Mr. Owens said that since the pandemic hit, there’s been a “dramatic shift” in the need for companies to train their employees using a digital learning platform – he said Absorb’s software was already well positioned for this shift.

“Our software … lets a business train and onboard new staff [and] train and develop existing staff without ever needing to have them together in a classroom all at the same time.”

The deal, he said, will help Absorb continue to accelerate its growth, particularly when it comes to hiring, adding that the company hopes to hire 100 to 150 employees each year, up from the 30 to 50 it has added in recent years.

Marc Munfa, operating partner at Silversmith, said that when the growth-equity firm backed Absorb four years ago, it identified the company as an “emerging leader” in its industry.

“They had a best-in-class product and it was exactly the type of investment we like to do,” Mr. Munfa said. “A founder-led business that had grown well without raising outside capital.”

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Over their four-year partnership, Silversmith helped Absorb build its leadership team, Mr. Munfa said, including current chief financial officer Mark Simner and current chief marketing officer Jill Adams. He said Silversmith also helped Absorb with its corporate development, financial systems and acquisitions of four other companies during that time.

“You combined [a] great founder, CEO and visionary and surrounded him with a great team, and a market-leading product was enabled to have a bigger presence in the market through more refined marketing and sales processes,” Mr. Munfa said.

Absorb competes with Docebo Inc., which went public on the Toronto Stock Exchange in 2019.

With the deal, Absorb joins Benevity, Symend and Neo in a cohort of Calgary tech companies winning big support from outside investors. In the future, Mr. Owens said he would love to see Absorb “ringing the bell of the New York Stock Exchange.”

“That’s absolutely my next-stage dream and goal for this company,” he said. “And to bring that dream to Calgary, I think, would be a tremendous achievement.”

Absorb says it now has more than 23 million users in 34 countries and has offices in London, Dublin, Shanghai, Sydney, Boston and Tampa.

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