Smartsheet is allowed to solicit other potential acquirers after announcing a $8.4 billion buyout deal with Blackstone and Vista Equity Partners on Tuesday. But analysts say the existing offer is likely to make it through, according to reporting from Seeking Alpha.
The all-cash acquisition will make Smartsheet a private company again, six years after the Bellevue, Wash.-based enterprise software company went public.
The $8.4 billion purchase price ($56.50 per share) represents a premium of about 41% to the volume weighted average closing price of Smartsheet stock for the 90 trading days ending July 17, before a report from Reuters on the potential deal.
The “go-shop” period to explore other deal offers ends Nov. 8.
Analysts told Seeking Alpha that other tech giants — including Amazon, Google, Zoom, and Oracle — could make sense as buyers, as well as other private equity firms.
But a larger offer is “unlikely to emerge,” according to The Wall Street Journal.
The Journal also noted that the deal could be a bellwether for other software buyouts.
M&A activity has slowed in the past few years amid higher interest rates, creating “pent-up demand (and supply), particularly in the private equity universe,” according to a recent report from PwC.
Blackstone recently gobbled up Seattle-based pet-sitting giant Rover in a $2.3 billion deal.
Smartsheet revenue increased 17% to $276.4 million in its most recent quarter. The company’s operating loss was $8.5 million, vs. a loss of $36.1 million in the same period a year ago.
Smartsheet’s revenue growth has slowed over the past four years, while its stock price has “gone nowhere for two years,” noted Martin Peers of The Information.
“Smartsheet is a good example of the kind of software firm that’s most likely to sell — one that’s closely identified with a single product, whose growth is slowing, and that isn’t controlled by its founder,” Peers wrote.
Smartsheet makes cloud-based enterprise work management technologies for managing and tracking projects, collaborating, storing data, and automating and assigning tasks, among other capabilities. It serves 85% of the Fortune 500 as customers.
Its competitors include Airtable, Asana, Atlassian, ClickUp, Monday.com, Planview, and Wrike. Features of Google, Microsoft, and Adobe products also compete with Smartsheet’s capabilities.
Smartsheet, which launched in 2005, has more than 3,300 employees.
The company’s journey has not been entirely smooth sailing. Madrona managing director Matt McIlwain, whose firm was an early investor in Smartsheet, recalled how the company nearly ran out of cash in 2008 and didn’t hire a sales rep until 2011.
“Early customers paid on average $500 per YEAR for a subscription and the company didn’t reach $10 million in revenue until 2012,” McIlwain, a board member at Smartsheet, wrote on LinkedIn. “Today the company is over $1 billion in revenue, generates substantial free cash flow and is the market leader in enterprise collaborative work management.”