Good morning, Hubsters. MK Flynn here on a news-packed Monday.
A big take-private enterprise software deal was announced earlier this morning.
At least one deal has come out of the Silicon Valley Bank debacle, and PE and secondaries investors are on the hunt for more opportunities.
And we’ve got an interview with a top woman dealmaker as part of our ongoing series throughout Women’s History Month.
We’ll kick things off with the software deal.
Tech-focused PE firm Silver Lake, in partnership with Canada Pension Plan Investment Board (CPP Investments), has agreed to acquire Qualtrics in an all-cash transaction for around $12.5 billion.
Headquartered in Provo, Utah and Seattle, Qualtrics is a pioneer in developing tools that help companies respond to online customers, a category known as experience management, or XM.
The company will continue to be led by CEO Zig Serafin.
“This is a landmark transaction for Silver Lake, reflecting our confidence in the team and their vision,” said Egon Durban, co-CEO of Silver Lake. “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, headquartered in Menlo Park, California, already owns more than four percent of Qualtrics shares and signaled interest in taking the business private in January, reports the Financial Times.
As part of the deal, enterprise software maker SAP is selling its majority stake in Qualtrics.
“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 of SAP. “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.”
The deal, which has been approved by the boards of Qualtrics and SAP, is expected to close in the second half of the year.
The sudden collapse of Silicon Valley Bank last week has ramifications for many aspects of the private equity and venture capital world.
At PE Hub, we’re most interested in the potential impact on dealmaking.
Private equity and secondaries buyers are watching the situation with an eye toward any hint of a fire sale of assets, reports Buyouts’ Chris Witkowsky.
SVB held limited partner fund stakes through a fund of funds platform called SVB Capital as well as on its balance sheet, sources told Chris. SVB Capital managed more than $9.5 billion as of February on behalf of third-party limited partners and, on a limited basis, SVB Financial Group, according to the bank’s annual report.
Speculation is that the fund-of-funds business would be spun off or acquired outright by a third party.
“I suspect in the medium term it will definitely divest,” said a secondaries buyer. “Those balance sheet commitments were made for relationship reasons.”
Meanwhile, one deal has already come out of the SVB collapse.
Silicon Valley Bank UK Ltd has been sold to London’s HSBC for £1.
“Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support,” said Chancellor of the Exchequer Jeremy Hunt in a statement. “HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
The SVB story is still unfolding.
Just last night, the Biden administration announced that all depositors would have access to all their money this morning, approving “an extraordinary intervention aimed at averting a crisis in the financial system,” as the Washington Post put it.
I’d love to hear your thoughts about how the SVB collapse may, or may not, be affecting your dealmaking and/or your portfolio.
Reach out to me at email@example.com.
Speeding up progress
Throughout the month of March, we’re highlighting women dealmakers.
Today, we’re featuring a conversation between PE Hub Europe’s Nina Lindholm and Morgane Bouhenic, a partner at IK Partners’ small-cap investment team in Paris.
Bouhenic’s curious nature and her love for entrepreneur stories led her to private equity, she told Nina.
“When I discovered private equity is not just about making good returns from the money that we invest, but also about speeding up the progress of these companies to take them to the next level – I knew this is what I wanted to do,” she said.
Bouhenic’s first deal solidified her interest in the industry. The target was a software company at a time when the industry was not quite as familiar with that sector as it is today, she said. “It was very technical and not an easy one. It was a very competitive auction, with both European and American funds.”
In Europe, only 20 percent of investment professional are women, and that figure falls to 10 percent at the senior level, according to the Level 20 European Gender Diversity Report 2022. While those numbers are not anything to write home about, Level 20 noted that at the junior level at least, women make up 34 percent of investment professionals.
The industry needs to work harder to retain those junior level women, Bouhenic said.
“We need to do more; we need to get better. Otherwise, we lose not only talent, but also the attractiveness in the competitive job market for new graduates.”
I couldn’t agree more.
On that note, I’ll sign off.
I’ll be back with more PE deal news tomorrow.
All the best,