Qualtrics was once a hot startup before SAP bought the company in 2018 for $8 billion. It was a fine exit, making the founders rich, but it never was really a good fit. SAP spun out the company just two years later, before taking it public in 2021.
On Sunday, the company filed an 8-K form with the SEC indicating it has an offer to go private again in a $12.4 billion deal with Silver Lake and the Canadian Pension fund that values the company stock at $18.15 per share.
“Our exclusivity agreement with Silver Lake is a next step in the process announced by SAP on January 26th. As the process continues to play out, we’re committed to achieving the best outcome for our company and our shareholders, as we maintain our focus on delivering for our customers around the world,” the company said in a statement.
Translated, that means the principle stockholder SAP began looking for buyers in January, and this is the best offer it received. It will probably continue to look for a better one, but if it doesn't come along, it will surely take this one.
It's certainly been a long, strange trip for the company. This time, SAP, which owns 71% of the company, would recoup its initial investment, but not much more (although it did probably gain some additional money when the company went public).
Anand Thaker, a martech consultant who keeps close watch on the companies, says it's a reasonable deal for both parties. "SAP needs cash and this seems like an excellent opportunity for them to return those funds to the coffers. Silver Lake is likely to come out healthy of funds from the pending VMware deal [with Broadcom]," he said. That deal is still subject to regulatory approval.
Qualtrics raised $400 million as a startup, per Crunchbase, and was poised to IPO when SAP swooped in in 2018 with an offer the company basically couldn’t refuse. It was a big number, and the founders took it. Bill McDermott, who was CEO at the time, saw it as a way to get more direct access to customer data, the holy grail of data for any company.
It also had the added benefit of being cloud native, and maybe having engineers who had built a SaaS product from the ground up could help SAP, which was in the process of transitioning to the cloud at the time. McDermott subsequently stepped down, eventually landing as CEO of ServiceNow, and his replacement, Christian Klein, probably wasn't as attached to something that wasn't acquired under his watch.
As Holger Mueller, an analyst with Constellation Research, told us at the time of the spin out, the company could still keep the benefits of the acquisition with the spinout, while recouping some of its investment, and that's probably how Klein saw it.
“SAP doesn’t lose anything in regards to their […] data and experience vision, as they still retain [controlling interest in Qualtrics]. It also opens the opportunity for Qualtrics to partner with other ERP vendors [and broaden its overall market],” he said at the time.
Qualtrics is a customer experience company. It operates on the side of the equation where companies can ask you about your experience in the form of a survey, like the one I got from my dentist last week after my cleaning. It also can be used to query sentiment inside an organization, as well.
The stock is up 1.43% on the news in mid-day trading.