00:00Look it's a time when everyone's wondering can you sell a software company at a good price. Is this sector
00:05in absolute turmoil. So why buy it. Why sell HCSS. Why was now the right time. Great to be here
00:12Danny. Thanks for having me. Can I say software deals are back. Is this the right. I think you're the
00:17leading voice on it. So if it's back you tell us AJ. Yeah it's exciting. We had an opportunity to
00:24merge our company with Nemechek take a significant stake in their company. This deals a year in the
00:29making. You know I'm honored that we got to partner with a great family controlled founder controlled German company. We've
00:37actually done this before with another family controlled German company recently called Heidelberg materials for another portfolio company called command
00:45Alcon. So we had some experience with the joint venture concept in these large transformational investments. And so we're going
00:53to bring our expertise our operational expertise our SAS our AI expertise. And in this case it's a
00:59design and product centric company. So we're just so happy to bring the two together. It's going to be a
01:05really important merger for the end. I know. I know when you talk to our reporter
01:08Crystal Sea about this story. A quote stood out to me. You saying essentially that the P.E. market is
01:13confused about software. Is the idea there. A.J. basically that some people are exiting software just because there's
01:19stress and there's liquidity and not because that they've actually grown and created value in the company. I mean look
01:26at the performance in some of these prints in Q1.
01:28And I'm sure you're going to see more good news coming out of that. But those companies that were ahead
01:34of this Danny to start to bundle generative
01:38AI years ago and agentic in the last couple of years with deterministic execution systems and SAS are doing really
01:45well. That's our portfolio. We've been ahead of this. So we've
01:49never performed better in the fund. It's kind of interesting that you know we're seeing this outflow of capital and
01:55continue to happen. Although some of the
01:57days are better than others but I would say we're experiencing unbelievable growth in the portfolio and you know the
02:05company I
02:05merged in is growing 21 percent. Building construct for Nemetrex growing in the mid-20s. This was a mid-20s
02:11EBITDA multiple deal. This is a
02:13healthy great space great companies. I mean this is a symbol that the market's still very good. I mean it's
02:19remarkable to hear
02:20AJ just given all of the stress. I wonder if do LPs feel the same way and what about financing
02:26markets? Are they open in the same
02:28way that they once were again given all the concerns about AI and software? We have the best LPs ever.
02:34So we had them all in Miami
02:35three weeks ago and they were like whatever you're doing keep doing more of it. Go faster, break more glass,
02:41put more agents, put more
02:42regenerative AI in and build scale and build account control in your best portfolio companies. So we have a hugely
02:48supportive LP base. We love it. We are absolutely buyers of whatever we can, of franchise leaders that we can
02:56partner with
02:56existing management right now. The financing markets are holding better than maybe the headlines would suggest, particularly in the
03:04mid-market. Up-market probably a little bit more challenging but still a very active market for software financing right
03:11now, particularly for
03:11those companies that have figured out AI pretty well. By the way, AJ, I know this is not exactly your
03:15expertise. I don't think it's
03:16anyone's expertise about shoe companies converting into AI companies. But I just have to ask you because you and the
03:22folks
03:22at Tama Bravo's are masters in building up companies and changing different directions. All birds, which you probably know
03:29there in San Francisco is the one that a lot of tech birds bros wore, now becoming new bird and
03:34an AI computing
03:36infrastructure company? I mean, AJR, are we just like at a moment of frenzy in this market around AI?
03:45Yeah, that's kind of a bubbly kind of thing to hear, I would say. I can't comment on what actually
03:51they're doing. There are a lot of companies with a lot of data assets, infrastructure assets that are hard
03:58goods, consumer goods, completely unrelated to technology that might be thinking about how do I monetize those
04:04assets and get paid for those assets and get paid for those assets in a modern world with digital infrastructure
04:09being so valuable. So I'm not sure what that headline was, Danny, but like that's an example of companies
04:15maybe being creative.
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