Vista Equity Partners and Blackstone are in advanced talks to acquire Smartsheet, a leading collaboration software company, in a deal valued at nearly $8 billion. According to sources familiar with the negotiations, the private equity firms are offering around $56 per share for Smartsheet, and a formal agreement could be signed in the coming weeks. This potential deal highlights the growing interest in software companies that offer robust solutions for large corporations, especially in a tech sector eager for consolidation.
The acquisition discussions were first reported in July, when Smartsheet began fielding interest from potential buyers. Since then, Smartsheet's stock has surged more than 16%, reflecting investor anticipation of a takeover. Should the deal proceed, it would rank as one of the largest take-private transactions of 2023, rivaling Silver Lake's $13 billion acquisition of Endeavor Group earlier this year.
Blackstone and Vista have reportedly been working with direct lenders to raise financing for the transaction. However, as with any high-stakes deal, terms could change before the final agreement is reached. Neither Smartsheet nor Vista has commented publicly on the matter, and Blackstone has declined to provide any statements.
The $8 billion valuation reflects Smartsheet's growing importance in the collaboration software space, where it has gained traction by offering a more versatile platform than Microsoft's Excel. Smartsheet's software enables organizations to manage, track, and automate workflows on a single platform, appealing to large corporations with complex operational needs. Its client base includes industry giants such as Pfizer, Cisco, and American Airlines, and it serves 85% of Fortune 500 companies.
Smartsheet, which went public in 2018, has been competing against companies like Atlassian, Asana, and Monday.com. However, Smartsheet's focus on larger enterprises has helped differentiate it from competitors that target smaller companies. In its second-quarter earnings report, the company beat market expectations, thanks to growth in orders from new enterprise clients. Analysts at Morningstar noted that Smartsheet has successfully navigated a tough macroeconomic environment and should continue to gain traction with new pricing strategies and product enhancements.
"As we look to the future, we are confident that Blackstone and Vista's expertise and resources will help us ensure Smartsheet remains a great place to work where our employees thrive," said Smartsheet CEO Mark Mader in a press release announcing the acquisition. Following the announcement, Smartsheet's stock rose 6%, indicating investor confidence in the deal's potential to benefit the company.
The acquisition offer values Smartsheet at $8.4 billion, with stockholders set to receive $56.50 per share-representing a 41% premium over the company's average closing price for the last three months. In line with standard acquisition protocol, Smartsheet will have a 45-day "go-shop" period, allowing the company to seek out other bidders. Unless a competing offer emerges, the deal is expected to close by January 2025, pending approval from shareholders.
This deal underscores the private equity industry's increasing interest in high-growth software companies, particularly those serving enterprise clients. With demand for digital transformation and collaboration tools rising, firms like Vista and Blackstone are betting on Smartsheet's ability to maintain its momentum in the competitive software-as-a-service (SaaS) sector.
Vista Equity Partners, which specializes in investments in enterprise software, data, and technology companies, is known for its hands-on approach to managing its portfolio companies. Blackstone, one of the largest private equity firms in the world, has also ramped up its investments in the technology sector in recent years. Both firms bring substantial resources and expertise that could help Smartsheet expand its product offerings and reach new markets.
The collaboration software space has seen increased interest from private equity firms as companies continue to shift toward remote and hybrid work models, driving demand for platforms that streamline operations and improve productivity. Smartsheet's ability to cater to the complex needs of large enterprises makes it an attractive acquisition target for investors looking to capitalize on this trend.
Goldman Sachs and Morgan Stanley are advising Blackstone and Vista on the transaction, while Qatalyst Partners is advising Smartsheet. The acquisition is poised to be a significant event in the SaaS landscape, further solidifying the role of private equity in driving consolidation within the tech sector.
