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- Climb's M&A Weekly: Climb advises Envision in sale to strategic buyer
Climb's M&A Weekly: Climb advises Envision in sale to strategic buyer
Capacity acquires Envision; Silver Lake takes Zuora private; & more
Nick @ Climb
October 20, 2024
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Welcome to Climb Advisor’s weekly deal newsletter highlighting transactions announced last week across the B2B tech landscape. Some large transactions announced this week!
Climb Advisors is an M&A and credit advisory firm focused on B2B software and services companies in the range of $5m to $100m+ enterprise value. We guide CEOs and business owners through the process of selling their business & assist investors in sourcing & closing great deals. We love to talk markets and share beneficial information - please reach out any time.
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Climb Advisors represents Envision in their sale to Capacity
Climb is delighted to announce the acquisition of Envision by Capacity.
Envision, founded in 1994 in Seattle, built a name as a leader in contact center software- creating a platform that enables supervisors & management teams to track agent interactions and activities, provides reporting & analytics, and offers call sentiment analysis and AI-driven coaching for agents based on call scores via the Click2Coach product. Capacity is on a mission to automate customer support across the enterprise, mining organizational docs and providing real-time query support via a chatbot style interface. Envision CEO Rodney Kuhn will join Capacity to help build out their contact center practice. In addition to the Envision transaction Capacity also announced two more acquisitions— Lucy, an enterprise search firm; & Linc, focused on support automation in E-commerce. Capacity also announced a raise of $26m to fuel further growth towards profitability & the 200 employee mark. Read more here.
Climb Comment: Kudos to all involved here, we were impressed with both the quality of the business Rod & team built at Envision and the professionalism & integrity shown by Capacity throughout our interactions with them. This is truly a synergistic acquisition, with Capacity integrating a platform that manages front line communications across the voice channel, adding to strengths from two earlier contact center acquisitions (link). Climb is continuing to work in the contact center/customer support space - please reach out or book a call via the link above if you’d like to discuss opportunities in that market as a buyer or seller.
Permira acquires Squarespace for Increased $7.2 billion Offer
Overview: Private Equity firm Permira has purchased the remainder of Squarespace’s common stock, taking the web design and hosting firm private in a deal valued at $7.2 billion. The acquisition was finalized after an increase of over 5.6% from the initial bid earlier this year of $6.9 billion. Squarespace shareholders will receive $46.50 per share, representing a 36.4% premium over the company’s three month average share price, prior to the transaction announcement in May. Squarespace CEO Anthony Casalena has rolled over a significant portion of his equity, thus remaining as one of the company’s largest shareholders. Read more here.
Climb Comment: We wrote a few months ago about Squarespaces’s divestment of their restaurant reservation service Tock to American Express for $400m cash, which helped to clean up some obligations on the balance sheet. Their sale to Permira takes place at a multiple of around 6.5x LTM revenue (roughly 56x LTM ebitda). Interesting to see management, as well as early investors Accel & General Atlantic, maintain meaningful stakes in the business - bodes well for the future of the business. Permira is no stranger to sizeable tech take-privates, having acquired Zendesk for more than $10B in 2022.
Ampiltude Completes a $20 million Deal for Command AI
Overview: Amplitude, a company which provides digital analytics software with clients that include NBCUniversal and Under Armour, has acquired Command AI, a startup specializing in AI user assistance. The deal was completed for $20 million (net of cash). The integration will allow Amplitude to enhance its platform by incorporating AI, helping clients understand and serve their customers better. Amplitude’s expanded services will include AI-driven surveys, checklists and product tours. Read more here.
Climb Comment: Another interesting deal at the intersection of AI and customer experience. Amplitude is a forerunner in the customer experience space for enterprise, providing analytics & mapping re: how users interact with an org’s website/product. Command AI takes similar data but offers a prescriptive approach that shows brands how to improve customer experience via leveraging AI to show places in user flows that would benefit from improvement. No doubt there will be tremendous uplift to these platforms’ ability to share data.
ADP Announces Acquisition of Cloud-Based WorkForce Software
Overview: ADP, a New Jersey based provider of human capital management (HCM) solutions, has acquired WorkForce Software, a cloud-based workforce management firm. The acquisition, for an amount that was not made public (rumored ~ $1.2B), will reinforce ADP existing strengths in the human capital management space. ADP currently delivers HCM solutions to one million clients in 140 countries. Read more here.
Climb Comment: Workforce Software is a substantial player in the HCM space, having more than 700 employees and receiving investment from Insight Partners in 2014 and Elliott in 2019. Without knowing specific details this is an example of what seems to be an ideal PE-backed software outcome - reasonable/increasing injections of capital on a ~5 year timeline & eventual exit to a large cap public strategic. The HCM space very much follows a platform model where customer orgs seek as much functionality as possible via a single platform. Workforce will add specific feature improvements as well as established customer base & revenue.
Zuora Acquired by PE Firm Silver Lake for $1.7 billion
Overview: Zuora, Inc. has announced that it will be acquired by Silver Lake, a global technology investing focused PE firm, in a deal valued at $1.7 billion. The transaction will see Zuora, a B2B subscription management firm become a privately held company. Zuora shareholders will receive $10.00 per share in cash, representing an 18% premium to the company’s unaffected closing price. The agreement was approved by Zuora's Board of Directors following a Special Committee's recommendation. Tien Tzuo, Zuora’s Founder and CEO, will continue to lead the company as it enters a new phase of growth. The transaction is expected to close in early 2025. Read more here.
Climb Comment: Take-private wave continues with this transaction, which provides an interesting set of market comps. The deal takes place at just below 4x TTM revenue for Zuora ($445m) - perhaps more accurate to describe the deal at 5.6x gross profit ($301m), as Zuora does see some pass-thru costs on the COGS line. ZUO has run at slight loss over the the past few years, though that has gotten closer to breakeven of late. Not much growth on the topline, which clearly factors into the multiple. Silver Lake likely has cost-cutting measures on the horizon and may look to run growth playbooks/add-on M&A as well. PE of course loves recurring revenue & being able to be the ‘toll road’ for orgs that generate recurring payments is an attractive space to invest. Kudos to all.
Article of the week
Interesting read (& applicable to a few deals above) here around the changing nature of saas/software delivery. As software development costs decline, and organizations seek to reduce spend/pay more attention to unused capacity in their toolsets we are seeing a shift in software GTM that looks more like a price-per-unit model, where users are charged for successful outcomes vs on a monthly/annual basis. Huge opportunity for scrappy teams to spin up LLM-powered services and take market share from incumbents, esp in fractured/specialized markets.
Thanks for following along & hope you found something useful or interesting. Please don’t hesitate to reach out if you’re considering a sale as we move towards 2025 - we’re always glad to chat & share perspective.
All the best,
Nick