What Happens When Private Equity Buys Your Software

You pick a piece of software. You learn it, configure it, migrate your data into it, train your team on it. It works well. You recommend it to other firms. Then one morning you get an email announcing a "new chapter" and an "exciting partnership" — and you know exactly what's coming next.

Price increases. Feature changes you didn't ask for. A support team that doesn't know the product as well as the one it replaced. The acquire-hike-neglect playbook has been running in UK accountancy software for over a decade, and if you haven't been affected yet, it's only a matter of time.

The TaxCalc story

TaxCalc was one of the most liked tax compliance tools in the UK. Small, focused, responsive to users. Their AccountingWEB reputation was earned over years of genuinely good software and UK-based support that actually helped.

Then came the private equity investment. And then came the price increases.

Firms reported rises of 30% or more in a single year. Not because the product had improved by 30%. Not because new features justified the cost. Simply because the new owners needed to hit return targets, and the easiest way to do that with a captive customer base is to raise prices.

The response on AccountingWEB was predictable. Firms that had been loyal TaxCalc users for a decade started shopping around. Some switched to alternatives. Others stayed, grudgingly, because migration is painful and January was coming. That reluctance to switch is exactly what PE firms count on — high switching costs make customers sticky, even unhappy ones.

IRIS: the acquisition machine

IRIS has been on a buying spree that would make a Monopoly player nervous. Senta, Staffology, KashFlow, FreeAgent for IRIS, Star Practice Management — the list keeps growing. Each acquisition comes with the same press release: "joining forces," "combined strengths," "better serving our customers."

What actually happens is more nuanced. Some acquired products continue to develop. Others slow down significantly. Users of Senta have noted that development cadence dropped after IRIS acquired it — fewer updates, less responsiveness to feature requests, a general feeling that the product was being maintained rather than improved.

The pattern isn't unique to IRIS. It's standard PE strategy: buy competitors to consolidate market share, extract value through price increases and cost-cutting, and cross-sell the wider product suite. The customer's interests and the investor's interests aren't the same thing, even if the marketing pretends they are.

BrightPay: the forced migration

BrightPay's desktop payroll software was popular precisely because it was desktop software. Firms liked that their data stayed on their machines, that it worked without an internet connection, that it did one thing well without trying to be a cloud platform.

Then BrightPay started pushing users toward its cloud product. Not by making the cloud version irresistibly good (though it's a decent product), but by making the desktop version increasingly impractical to stick with. Fewer updates. Feature gaps. The clear message: move to cloud or get left behind.

For firms that specifically chose desktop software for data sovereignty or reliability reasons, this felt like a bait-and-switch. You chose the product for what it was, and then the product changed into something you didn't want. Your preferences as a customer became secondary to the company's strategic direction.

The playbook

If you look at these stories together, a pattern emerges. It's the same playbook every time:

1. Build or buy a product with a loyal user base. The product is usually good. That's how it got the user base in the first place.

2. Take PE investment or get acquired. The press release talks about "accelerating growth" and "investing in the product."

3. Raise prices. Sometimes gradually, sometimes all at once. The justification is usually vague — "continued investment in the platform" — but the real driver is return targets.

4. Cut costs. Support gets outsourced or reduced. The original development team shrinks. Updates slow down. The product enters maintenance mode while still charging growth-stage prices.

5. Cross-sell or force-migrate. If the acquirer has other products, you'll be nudged (or pushed) toward them. Your standalone tool becomes a gateway to a more expensive suite.

6. Lock-in deepens. By the time you realise what's happened, your data is deeply embedded, your team is trained on the platform, and switching feels like it would cost more than staying. So you stay. And the cycle continues.

How to protect your firm

You can't prevent PE from buying your software vendor. But you can make choices that reduce your exposure.

Ask about ownership before you buy. Who owns the company? Have they taken outside investment? Is there a PE firm in the background? This isn't on most firms' evaluation checklists, but it should be. A bootstrapped company with aligned incentives is a very different proposition from a PE portfolio company optimising for a three-to-five-year exit.

Check your data portability. Can you export your client data in a standard format (CSV, JSON, whatever)? Can you get your documents out? If the answer is no, or "yes but it's complicated," you're locked in — and locked-in customers are exactly the ones who get hit with price increases.

Watch the signals. Development slowing down. Support quality dropping. Key staff leaving. Prices rising faster than inflation. These are leading indicators, not lagging ones. By the time the press release announces the acquisition, the decision was made months ago.

Favour smaller, founder-led tools. This isn't foolproof — small companies get acquired too. But a company where the founder is still writing code and answering support tickets has fundamentally different incentives from a company where the CEO reports to a PE board. The founder wants you to stay because the product is good. The PE board wants you to stay because leaving is hard. Those are very different motivations.

What this means for your practice

Every piece of software in your practice is a dependency. Your tax compliance tool, your practice management system, your payroll software, your document storage — if any of them gets acquired and the experience degrades, your team feels it every day.

The UK accountancy software market is particularly vulnerable to this pattern because it's fragmented enough to attract consolidators but sticky enough to tolerate price increases. IRIS has shown that you can buy half the market and keep raising prices because firms would rather pay more than migrate.

That's a rational calculation in the short term. In the long term, it means you're subsidising someone else's investment returns instead of investing in your own practice.

We built Fortium as an alternative to this cycle. Independently owned. Flat pricing that doesn't change because a board needs to hit a number. Your data is yours — exportable, portable, never held hostage. We think the best way to keep customers is to build something they actually want to use, not to make leaving difficult. Novel concept, apparently.

The next time you get an email about an "exciting new chapter" for your software, check who's writing it. If it's a PE firm, start planning your exit. You've got twelve months — maybe eighteen — before the price goes up.