In another big-ticket exit for private equity in the govtech space, NEOGOV—a cloud-native HR and compliance platform built specifically for U.S. public sector agencies—is being acquired by the EQT X fund and the Canada Pension Plan Investment Board (CPP Investments). The deal marks a significant transition from current backers Warburg Pincus and Carlyle, who helped scale NEOGOV over nearly a decade of ownership.

The transaction, announced today, is expected to close in the coming months, pending standard regulatory approvals. Financial details were not disclosed, but the strategic context is clear: EQT and CPP are betting on digital transformation in the U.S. public sector—and NEOGOV is right in the sweet spot.

GovTech with Purpose—and Profits

Founded in 2000 and based in El Segundo, California, NEOGOV serves nearly 10,000 public sector organizations across North America, ranging from city governments and school districts to police departments. The platform manages the full employee lifecycle, from recruitment and onboarding to performance reviews and compliance tracking—offering tools tailored to the regulatory complexities of public service HR.

NEOGOV also offers public safety-focused solutions, making it a rare blend of GovTech and RegTech. That’s a combination EQT, known for its investments in scalable, mission-critical software platforms, clearly sees long-term value in.

In an era where local and state agencies are under pressure to digitize, streamline hiring, and improve transparency, NEOGOV’s compliance-first architecture—and large installed user base—offer both a moat and a launchpad.

A Strong Exit for Warburg and Carlyle

The sale marks a solid return for Warburg Pincus and Carlyle, which partnered to back NEOGOV through a period of “consistent top-line growth,” according to Warburg’s Brian Chang. During their tenure, the company expanded its product suite and established itself as a leading SaaS provider for the often-overlooked public sector HR market.

Warburg Pincus, a heavyweight in cloud and enterprise tech investing with stakes in companies like CrowdStrike, Avalara, and Clearwater Analytics, saw NEOGOV as a textbook fit for its growth strategy. Carlyle, meanwhile, brought operational support and industry connections that helped fuel the company’s expansion.

The Bigger Picture: A Rising Tide for Public Sector SaaS

This acquisition underscores a growing theme: public sector SaaS is having a moment. The market for purpose-built software that meets the idiosyncratic needs of governments—especially at the municipal and state level—is expanding rapidly. Budget constraints, staffing shortages, and remote work trends have accelerated digital adoption, creating a lucrative, high-barrier-to-entry niche for specialized providers.

EQT’s interest here mirrors similar recent investments in vertical SaaS platforms with long customer lifecycles and high retention rates. For CPP Investments, it’s a chance to tap into long-term infrastructure-like returns from a digital asset class.

NEOGOV CEO Shane Evangelist, who will stay on to lead the company, called the transition “a new chapter,” praising Warburg and Carlyle for their role in scaling the platform. With EQT and CPP’s resources and longer-term investment horizons, NEOGOV appears poised to deepen its public sector footprint—and possibly eye acquisitions of its own.

The deal was advised by Moelis & Company LLC (for NEOGOV) and Jefferies LLC (for EQT/CPP). Legal counsel was provided by Willkie Farr & Gallagher LLP and Ropes & Gray LLP, respectively.

As govtech spending continues to climb, NEOGOV’s transition hints at what’s next: more consolidation, more specialization, and more private equity firepower chasing public sector digital transformation.