Legacy Capital: Sector Thesis – Legacy Digital Infrastructure

Sector Thesis: Legacy Digital Infrastructure

At Legacy Capital, we focus on businesses modernizing the analog workflows that still power critical industries. Legacy Digital Infrastructure refers to tech-enabled platforms and services that digitize outdated, manual, or paper-based processes across sectors like legal, compliance, logistics, credentialing, and healthcare admin.

These companies often serve institutional, commercial, or regulated end markets. They typically operate at the intersection of process, data, and regulation.

They are typically overlooked by traditional tech investors due to slow sales cycles or operational complexity, and ignored by roll-up platforms focused on simpler service categories.

Why This Sector

The U.S. digital transformation market is expected to grow from $660 billion in 2025 to $1.66 trillion by 2030 (20% CAGR) (market.us). Legacy modernization alone represents a $25 billion opportunity today, expanding to $57 billion by 2030 (Mordor Intelligence).

Additional tailwinds include:

• Compliance and RegTech projected to surpass $13.7B by 2027 (ResearchAndMarkets).
• LegalTech to reach $29.7 billion globally by 2030, but 65% of small-to-midsize firms still rely on legacy systems (Grand View Research).
• Healthcare RCM and back-office software in the U.S. is projected to reach $400 billion by 2030 (McKinsey & Company).

This is a structurally inefficient, undercapitalized segment that lacks institutional attention despite clear operational and economic upside.

Why Now

• 54% of U.S. middle-market companies say digital transformation is “very important” — but only 9% embed it into strategy. Those that do grow 75% faster (National Center for the Middle Market).
• North America makes up 43% of global digital infrastructure, growing at 27% CAGR (market.us).
• <10% of mid-market healthcare services firms have received institutional capital despite being margin-rich and founder-led (Bain & Company).
• In LegalTech and ComplianceTech, <20% of Series A/B raises come from traditional growth or crossover funds (Crunchbase).

Most of these businesses are still operating with outdated systems and no succession plan — sitting on strong customer relationships and scalable operations that have never seen institutional capital.

What We Look For

• Tech-enabled services with recurring or repeatable revenue
• Core customers in regulated or risk-sensitive sectors (e.g. legal, healthcare, logistics)
• Founder-led firms with domain expertise and succession needs
• Businesses with operational complexity often avoided by less experienced funds

65–75% of workflows in credentialing and compliance vendors are still manual (Gartner). 68% of U.S. law firms still rely on Microsoft Word and email as their primary workflow tools (Clio Legal Trends Report 2023).

We pursue companies that require real operational experience to unlock their full potential. These are the businesses where our Transformation Engine creates compounding value.

Why Legacy Capital Has the Edge

Shared Seller Profile: Whether in logistics or digital infrastructure, we target the same DNA: founder-led, cash-flowing companies with generational transition needs.

Exit Versatility: These businesses intersect with regulated, data-rich workflows — creating exit paths to PE platforms, strategic buyers, or vertical consolidators.

Transformation Engine Fit: Our playbook — digitization, revenue model upgrade, and go-to-market rebuild — fits this sector precisely. We aim to be the first institutional capital in and the last capital needed before exit.

Market-Backed Outcomes: In 2023–24, B2B tech-enabled service platforms in logistics, compliance, and credentialing exited at a 9.3x TEV/EBITDA median multiple (GF Data). Sponsor-backed deals often achieved 2.4x–3.1x MOIC within 3–5 years (Bain Private Equity Mid-Market Report 2024).

What We Avoid

• DTC brands and influencer-driven platforms
• Overcrowded roll-up sectors (e.g. HVAC, pest control)
• Pure-play SaaS without embedded services or workflow lock-in

What We Pursue

• B2B service businesses supporting logistics, compliance, aging infrastructure, or commercial operations
• Tech-enabled services in outdated, data-rich industries
• Founder-led firms with low churn, high margins, and succession needs
• Companies where we can be the first institutional capital and the last capital needed before exit

Conclusion

Legacy Digital Infrastructure is not about chasing the next app. It’s about modernizing the operating system of overlooked industries. 

We buy them right, modernize what matters, and exit with clarity into a market that’s already validated the outcome. 

We are investing in sticky infrastructure before anyone else sees the signal.

Sources

1. market.us – Digital Transformation Market (2024)
2. Mordor Intelligence – Legacy Modernization Market (2024)
3. Grand View Research – LegalTech (2023)
4. ResearchAndMarkets – RegTech (2023)
5. McKinsey & Company – Healthcare Ecosystems (2023)
6. National Center for the Middle Market (2023)
7. Crunchbase – LegalTech Funding Trends (2024)
8. Bain & Company – Healthcare PE (2023)
9. Gartner – Compliance Workflows (2023)
10. Clio – Legal Trends Report (2023)
11. GF Data (2024)
12. Bain Private Equity Report (2024)