SunGard put up for sale with $10bn price tag, according to reports

Private equity owned software and services company to be sold in trade sale or IPO

Software and services company SunGard has appointed advisers in order to prepare a sale of the company. However, the ambitious $10bn price tag reportedly pinned to the company is unlikely to be met following the divestment last year of its disaster recovery unit, renamed SunGard AS, and the debt levels currently attached to the company following big dividend payments in 2012.

The company has been owned by private equity since 2005 following a $11.4bn acquisition in 2005 by a consortium including Bain Capital, Blackstone Group, Goldman Sachs Capital Partners, KKR & Co, Providence Equity Partners, Silver Lake Partners, and TPG Capital.

The disaster recovery unit that was spun-out last year accounted for about one-third of the company's revenues, while the dividend payment to shareholders in 2012 cost $720m, while the company has struggled with growth. Meanwhile, its UK public sector outsourcing business was sold off to Capita in December 2010 for £86m, and subsequently renamed Capita Secure Managed Services. It also carries total debts of $4.7bn, according to its last full-year accounts.

The divestments and debts make it unlikely that SunGard's shareholders will achieve the claimed $10bn price tag. According to Reuters, "SunGard is one of the longest-held investments in private equity history. Its owners have struggled to boost the company's value to the point where they can cash out and make a decent return".

However, Reuters claims that SunGard's private equity owners decided to seek a sale of the company after an approach by an unnamed potential buyer. Its owners are currently pursuing both a trade sale, as well as investigating the possibility of an initial public offering, which would return it to the stock market.

Following divestments in recent years, Sungard posted revenues of $2.8bn in the year to the end of December 2014, which were up by just two per cent, year on year, according to its accounts filed in February. Operating income was just $87m following a $339m charge related to the spin-off of its once-flagship disaster recovery unit.