In 2018, Smartsheet went public, but now the company is going private again after announcing an $8.4 billion buyout deal with Blackstone and Vista Equity Partners. The all-cash acquisition, at a price of $56.50 per share, represents a premium of about 41% to the volume weighted average closing price of Smartsheet stock. The deal provides a “go-shop” period until November 8 for the company to explore other deal offers from potential acquirers. However, analysts believe that the existing offer is likely to make it through, despite the possibility of other tech giants or private equity firms entering the picture.
The purchase price and decision to go private again mark a significant step for Smartsheet, which will return to being a private company after six years of being a publicly traded enterprise software company. Other potential acquirers such as Amazon, Google, Zoom, and Oracle are seen as potential buyers by analysts, but a larger offer is considered unlikely. The deal with Blackstone and Vista Equity Partners may also serve as a bellwether for future software buyouts, amidst a backdrop of slowed M&A activity in recent years due to higher interest rates.
Smartsheet’s financial performance has shown signs of growth and improvement, with revenue increasing 17% to $276.4 million in its most recent quarter. The company’s operating loss has also decreased significantly compared to the same period a year ago. Despite these positive indicators, the company’s revenue growth has slowed over the past four years, and its stock price has remained stagnant for the past two years. The characteristics of being closely identified with a single product, having slowing growth, and lacking founder control may make Smartsheet an attractive acquisition target.
Founded in 2005, Smartsheet offers cloud-based enterprise work management technologies that are used for managing projects, collaborating, storing data, and automating tasks. The company serves 85% of the Fortune 500 as customers and competes with other similar platforms such as Airtable, Asana, Atlassian, ClickUp, Monday.com, Planview, and Wrike. Despite facing competition from Google, Microsoft, and Adobe products, Smartsheet has managed to establish itself as a market leader in enterprise collaborative work management. With more than 3,300 employees, the company has grown significantly since its early days.
The journey of Smartsheet has not been without challenges, including financial struggles in the early years and slow revenue growth. However, with the support of investors such as Madrona managing director Matt McIlwain, who has been involved with the company since its early days, Smartsheet has been able to overcome these obstacles and reach a revenue of over $1 billion. The company’s success and growth demonstrate its ability to adapt and evolve in response to changing market conditions and challenges in the enterprise software industry. As it prepares to go private again, Smartsheet looks to continue its trajectory of growth and innovation with the support of new ownership.
