Acquisition of Qualtrics is Completed as Firm is "Taken Private" at a Final Value of $4.3 Billion

Acquisition of Qualtrics is Completed as Firm is "Taken Private" at a Final Value of $4.3 Billion
Photo by Mufid Majnun / Unsplash

Qualtrics (NASDAQ:XM) is no longer a publicly traded company as Silver Lake and Canada Pension Plan Investment Board (CPP Investments) have acquired the leading "Experience Management" firm.

According to my calculations, the per share acquisition price of $18.15/share, coupled with an additional $1 billion investment announced at closing, gives Qualtrics a final valuation of $4.3 billion.

As noted in this filing with the U.S. Securities and Exchange Commission, the acquisition was initially announced 12 March 2023 as a "virtually done deal," having previously been approved by all of the prominent parties that together held super-majority ownership in Qualtrics, most notably SAP and Silver Lake.

With approximately 183 million shares outstanding at the close of the acquisition, shareholders will receive $18.15 per share. This buyout price represented a 73% premium 30-day volume-weighted average price on 25 January 2023, the day SAP announced it would "explore a sale of its stake in Qualtrics."

Also benefiting from the acquisition are all holders of Qualtrics stock options and/or Restricted Stock Units. Such RSUs and options vested immediately into Qualtrics Class A Common Shares at the transaction closure, meaning that these individuals will receive the full cash payment of $18.15 as a result of the acquisition for each RSU/option they hold.

Getting to a $4.3 Billion Valuation

Additionally, three separate firms joined with Silver Lake to invest a combined $1 billion in Qualtrics in connection with the acquisition:

  • Accel (a global venture capital firm) made a $500 million investment,
  • BDT & MSD Partners (a merchant bank) made a $250 million investment, and
  • DFO Management (the family investment office of Michael Dell) also made a $250 million investment.

If I understand the different transactions correctly, the combined $1 billion investment in Qualtrics by these three entities coupled with the assigned value of $18.15 for each outstanding share of Qualtrics places a final value of $4.3 billion on the company:

$1B + ($18.15/share X ~183 million shares) = $4.3B.

As expected, public trading in Qualtrics shares has now stopped on the NASDAQ Stock Market, and the company's stock will soon be deregistered with NASDAQ.

What's Next for Qualtrics?

In all reality, very little should change for Qualtrics on a day-to-day basis, at least for now.

Yes, all prior Qualtrics board members have been replaced effective with the acquisition. {NOTE: To be clear, I could find nothing in the SEC filings disclosing whether or not Ryan Smith will remain as the Chair of the Board.}

Given the Qualtrics purchase by Silver Lake and CPP, it's clear that they believe they can drive a significant boost in the perceived value of the firm, something quite common for such private equity buyouts.

This being the case, I would not be surprised to see an additional Reduction in Force at Qualtrics sometime in the coming six to 12 months in an effort to further reduce expenses and "right-size" the firm. {NOTE: In my opinion, this would be in addition to the global RIF of ~270 employees the company announced 11 January 2023.}

But otherwise, I expect Qualtrics ownership to push forward aggressively to grow adoption of the Experience Management marketplace beyond the 19,000+ global customers who currently use XM services.