The Key to Margin Growth in Software Investing
We’re thrilled to be featured in Bain & Company’s 2025 Global Private Equity Report. This year’s deep dive into Margin Growth in Software Investing highlights a critical challenge for investors: while expanding margins is a cornerstone of most software buyout strategies, actually delivering on those targets is another matter entirely. Bain’s analysis of 33 software buyouts found that while nearly all projected significant margin expansion, the majority fell short of their goals.
So why is margin expansion so elusive? Historically, investors have focused on revenue growth and multiple expansion to drive returns, benefiting from favorable macroeconomic conditions. But in today’s high-valuation, capital-constrained environment, that approach is no longer enough. Investors must integrate commercial, technical, and operational intelligence to identify and execute on sustainable margin improvements.
This is where OPEXEngine’s proprietary benchmarks play a critical role. Our platform, supported by Bain & Company, provides investors with data-backed insights into operational efficiency, sales productivity, and cost structures – key levers for expanding margins. Without clear benchmarking, investors are left guessing how much investment is needed to achieve profitable growth. OPEXEngine’s data helps transform guesswork into informed decision-making so firms can underwrite margin expansion with confidence.
The report underscores how leading investors are using an integrated due diligence approach to unlock profitable growth. For example, a recent software buyout leveraged OPEXEngine’s benchmarking to assess go-to-market productivity, revealing a 30% gap compared to top-quartile peers. With this insight, the firm was able to craft a targeted value-creation plan, prioritizing the right investments to improve efficiency and scale profitably.
As private equity firms navigate an increasingly competitive deal landscape, the ability to accurately assess and execute on margin expansion strategies will be a key differentiator. OPEXEngine is proud to provide validated, third-party benchmarks that help investors bridge the gap between ambition and execution.
To learn more about how OPEXEngine’s benchmarking solutions can support investors and operators alike, get in touch with us today.
