One Identity, Five Tranches: The Quest Software LME

Welcome to the 145th Pari Passu newsletter.

In today’s premium edition, we’re diving into Quest Software, an enterprise IT company that is currently at the forefront of the latest trends in liability management and is now an evolving real-time case study. Quest, backed by Clearlake Capital, is well known for its AI-enhanced IT software offerings such as One Identity. 

This piece will provide an overview of Quest and its corporate history, and explore how the company’s strategic pivot to a SaaS model created short-term liquidity pressure that abruptly collided with over $3.5bn of LBO debt. We’ll also cover recent trends in uptier transactions and liability management before diving deep into the details of Quest’s May 2025 uptier transaction. We’ll end with a recovery analysis across the five-tranche post-transaction structure and detail Clearlake’s sponsor subordination that ultimately pushed the deal through. 

In addition, we will provide an overview of the transaction announced this Monday, as the situation evolved yet again, as Quest launched its second debt exchange in three months. This piece is both a deep dive into the May transaction and an analysis of the unfolding August 2025 development. Let’s dive in. 

Section Preview

• Quest Software Overview

• Events Preceding the Clearlake Buyout

• Clearlake Buyout

• Liquidity Headwinds

  • Weak Revenue

  • Excessive Leverage

• Uptier Review

  • Open Market Purchase Language

  • Extend and Exchange Transactions

  • Cooperation Agreements, Majority Amendments, and Sacred Rights

• May 2025 LME

• Post-Uptier Considerations

• Recovery Analysis

  • Post-Transaction Recoveries

  • Pre-Transaction Recoveries

  • Recovery Comparison

• August 2025 Update

• Takeaways & Conclusion

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