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Silver Lake’s $12.5bn acquisition of software company Qualtrics

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​In a deal announced on 13 March, US private equity giant Silver Lake has agreed to purchase Qualtrics for $12.5bn alongside CPP Investments, Canada’s largest pension fund. The agreement comes after many months of negotiations with majority owner SAP, as the German software group seeks to restructure its holdings by divesting its 71% stake in the business. The purchase price of $18.15 per share comes at a 30% premium over the 30-day average trading price, which will be mostly funded by equity with only $1bn in debt.

Qualtrics is a specialised software business, with in-house analytics tools that enable modern businesses to serve their online customers. The company, based in Provo, Utah is founded in 2002 by brothers Ryan and Jared Smith. In FY2022, the business generated $1.5bn in revenue, with the majority coming from annual subscriptions. Their on-demand curated research offering also generates a significant stream of their revenue. “I couldn’t be more excited for this step in our journey,” said Ryan Smith, Qualtric’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.”

Morgan Stanley was the lead advisor for Qualtrics while JPMorgan advised Silver Lake. "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. "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' success." From 10,000 clients at the time of SAP’s acquisition in 2018, the number of companies and brands using Qualtrics software has risen to over 18,000 today.

The transaction is expected to close in the second half of this year, subject to the usual regulatory approvals. Once completed, this transaction will be the largest private equity buyout of the year.