Qualtrics accepts $12.5B offer; new owners will take it private

One week after news of an acquisition bid first came to light, Provo-based Qualtrics announced that it has accepted a $12.5 billion all-cash offer from private equity firm Silver Lake and the Canada Pension Plan Investment Board (CPP Investments). The sale comes two years after German software giant SAP spun the business out as an independent publicly traded company, having bought it in 2019 for $8 billion from founder Ryan Smith, just as Qualtrics was planning an IPO.

Qualtrics is the software company behind an experience management platform used by thousands of companies such as Uber, Coca-Cola and Pfizer. Founded in 2002, Qualtrics’ software helps companies gather data and measure how their customers experience their products. In its first year as a public company, its shares had mostly traded above its $30 IPO price, but as with many companies over the past 12 months, Qualtrics has seen its market value plummet from a high of $28 billion in early 2021 to a low of around $5 billion at the end of 2022, where it has roughly remained since.

Silver Lake and its co-investors, together with CPP Investments, will acquire 100 percent of the outstanding shares that Silver Lake does not already own, including the entirety of SAP’s majority ownership interest. Upon closing of the acquisition, Qualtrics will become an independent, privately held company. The transaction is expected to close in the second half of this year.

Under the terms of the agreement, Qualtrics shareholders, including SAP, will receive $18.15 per share in cash. This represents a 73 percent premium to the 30-day average share price on Jan. 25, the last full trading day prior to SAP’s announcement that it was exploring a sale of its stake in Qualtrics.

Qualtrics will continue to be led by CEO Zig Serafin and the company will remain headquartered in Provo and its Seattle co-headquarters, which it opened in the summer of 2020.

“I couldn’t be more excited for this step in our journey,” said Smith, who will continue as the company’s executive chairman. “Silver Lake’s belief in our vision and their amazing track record of helping founders and management teams speaks for itself. We look forward to working together and driving category-defining growth to build the next great enterprise cloud platform.”

“Qualtrics is becoming central to how businesses make mission critical customer and employee decisions that increase revenue and operational efficiency,” said Serafin. “With our AI-powered platform and automated actions, we help companies deliver exceptional experiences and build deep relationships with their customers and employees at scale. We are incredibly excited to partner with the team at Silver Lake, who deeply understands our business and will help us continue to build a high-performing company, invest in our innovation and expand our ecosystem to help our customers succeed.”

“We are strong believers in the amazing technology platform that Ryan, Zig and their phenomenal engineering and sales teams are building, and we’re thrilled to support the continued efficient growth of Qualtrics into a generational, highly profitable platform company by enabling further investment across all aspects of the business, including areas such as AI and other powerful new technologies,” said Egon Durban, co-CEO of Silver Lake. “This is a landmark transaction for Silver Lake, reflecting our confidence in the team and their vision. As they shape and continue to grow the next great enterprise software platform, they are the kind of leaders we have been most excited to partner with over many years of technology investing.”

“Silver Lake has both the operational expertise and the track record with software companies to help Qualtrics extend its leadership in the XM category it pioneered,” said Christian Klein, CEO and member of the executive board of SAP SE. “Since we acquired Qualtrics in 2019, the company has more than tripled its revenue while delivering profitability. SAP intends to remain a close go-to-market and technology partner, servicing joint customers and continuing to contribute to Qualtrics’s success. The number of companies and brands using Qualtrics software has risen from 10,000 at the time of SAP’s purchase to over 18,000 today.”

“We would like to thank SAP for their stewardship of Qualtrics over the past four years,” said Kyle Paster, managing director at Silver Lake. “We are pleased to be joined by a high-quality investor and bank group in supporting Ryan, Zig and the rest of the Qualtrics team with a low-leverage capital structure designed to fuel the company’s next stage of growth, broadening the power of the Qualtrics technology platform.”

“This is a unique opportunity to invest in a category creator led by a strong management team that is shaping a rapidly growing market,” said Hafiz Lalani, managing director and head of direct private equity at CPP Investments. “We look forward to supporting the team in driving continued innovation as they help clients re-define their customer and employee experiences around the world.”

Silver Lake is a global technology investment firm, with more than $92 billion in combined assets under management and committed capital. It has offices in North America, Europe and Asia. Silver Lake’s portfolio companies collectively generate more than $272 billion of revenue annually and employ approximately 681,000 people globally.

The Canada Pension Plan Investment Board is a professional investment management organization that manages an investment fund for its 21 million contributors and beneficiaries of the Canada Pension Plan. Headquartered in Toronto, it has offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney. As of Dec. 31, the fund totaled $536 billion.