Public-to-Private
Qualtrics buyout for $12B could set take-private record for 2023
March 6, 2023
Software deals have been dominating the biggest PE-led take-private deals, and Silver Lake's newest target is no exception.
On Monday, B2B SaaS company Qualtrics received a $12.4 billion buyout offer from Silver Lake in partnership with Canada's largest public pension plan in what would be the biggest take-private deal this year.
The tech-focused PE firm and the Canada Pension Plan Investment Board hope to acquire Qualtrics from its majority owner SAP, a business software tool provider, which has said it wants to divest its 71% stake. SAP acquired Qualtrics for $8 billion in 2019 and publicly listed shares two years later, while retaining majority control.
Silver Lake, which already owns 4.1% of Qualtrics, and CPPIB are offering $18.15 per share in cash for the Utah-based software company—a 6% premium from its price at market close Friday and 62% premium over the price before SAP announced its divestment plan.
This deal comes amid questions about future take-private deal volume. Take-privates had a strong year in 2022 with a total of 110 PE-led deals, adding up to over $260 billion in total exit value, according to PitchBook data.
But the strategy's hot streak came to an abrupt halt in November, which saw zero take-private transactions—a first for the category in 17 years.
This marks either a slowdown in the frequency of mega-deals—deals valued at or above $1 billion have historically made up the bulk of the transactions—or it could reflect a shift toward buyout firms targeting more middle-market-sized deals, according to PitchBook's 2022 Annual US PE Breakdown.
The slowdown comes as PE firms are experiencing shrinking access to debt financing as banks pull back on underwriting leveraged loans, which are typically used to finance LBOs and PE-led take-privates. The lending pullback is in response to poor public market performance, uncertainty around public market valuations and interest rates and mounting levels of inflation. From 2021 to 2022, the leveraged loan market dropped by 80%.
But software-focused take-privates are the most resistant to these headwinds. Already in 2023, PE giant Thoma Bravo completed its $8 billion acquisition of Coupa Software, and Vista Equity Partners scooped up security training platform KnowBe4 for $4.6 billion. Vista also plans to acquire Duck Creek Technologies, an enterprise software and data company, for around $2.6 billion.
Multibillion-dollar acquisitions of tech and software companies like Twitter ($44 billion), computer security company McAfee ($14 billion), and cloud-based planning platform Anaplan ($10.7 billion) composed about one-third of global PE-led take-private activity in 2022. Software deals made up a significant portion of PE-led take-privates over the past decade, hovering between 10% to 16% until the 2022 jump.
In 2023, software take-privates have been off to a running start, with three deals comprising a total of $5.6 billion and claiming over a third of this year's deals. The Qualtrics acquisition would more than double that number.
Featured image by whiteMocca/Shutterstock
On Monday, B2B SaaS company Qualtrics received a $12.4 billion buyout offer from Silver Lake in partnership with Canada's largest public pension plan in what would be the biggest take-private deal this year.
The tech-focused PE firm and the Canada Pension Plan Investment Board hope to acquire Qualtrics from its majority owner SAP, a business software tool provider, which has said it wants to divest its 71% stake. SAP acquired Qualtrics for $8 billion in 2019 and publicly listed shares two years later, while retaining majority control.
Silver Lake, which already owns 4.1% of Qualtrics, and CPPIB are offering $18.15 per share in cash for the Utah-based software company—a 6% premium from its price at market close Friday and 62% premium over the price before SAP announced its divestment plan.
This deal comes amid questions about future take-private deal volume. Take-privates had a strong year in 2022 with a total of 110 PE-led deals, adding up to over $260 billion in total exit value, according to PitchBook data.
But the strategy's hot streak came to an abrupt halt in November, which saw zero take-private transactions—a first for the category in 17 years.
This marks either a slowdown in the frequency of mega-deals—deals valued at or above $1 billion have historically made up the bulk of the transactions—or it could reflect a shift toward buyout firms targeting more middle-market-sized deals, according to PitchBook's 2022 Annual US PE Breakdown.
The slowdown comes as PE firms are experiencing shrinking access to debt financing as banks pull back on underwriting leveraged loans, which are typically used to finance LBOs and PE-led take-privates. The lending pullback is in response to poor public market performance, uncertainty around public market valuations and interest rates and mounting levels of inflation. From 2021 to 2022, the leveraged loan market dropped by 80%.
But software-focused take-privates are the most resistant to these headwinds. Already in 2023, PE giant Thoma Bravo completed its $8 billion acquisition of Coupa Software, and Vista Equity Partners scooped up security training platform KnowBe4 for $4.6 billion. Vista also plans to acquire Duck Creek Technologies, an enterprise software and data company, for around $2.6 billion.
Multibillion-dollar acquisitions of tech and software companies like Twitter ($44 billion), computer security company McAfee ($14 billion), and cloud-based planning platform Anaplan ($10.7 billion) composed about one-third of global PE-led take-private activity in 2022. Software deals made up a significant portion of PE-led take-privates over the past decade, hovering between 10% to 16% until the 2022 jump.
In 2023, software take-privates have been off to a running start, with three deals comprising a total of $5.6 billion and claiming over a third of this year's deals. The Qualtrics acquisition would more than double that number.
Featured image by whiteMocca/Shutterstock
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