Does the buyout bode well for unicorn exit prices?
good morning and happy monday! It’s Early Stage week here at Marketingwithanoy, which means I have some prep work to do. With that in mind, let’s take a brief look at SailPoint’s massive private equity buyout to guess what the transaction says about the value of technology companies.
The sale of SailPoint comes amid a changing exit market for technology companies in general. Per exit data collected by CB Insights, while global M&A activity has been stable so far in 2022 compared to last year’s pace, IPO and SPAC exits fell sharply in the first quarter. That means mergers and acquisitions are more important than ever for technical exits, making the SailPoint deal worth spending time on.
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From a high level, the exit of SailPoint is not a mercy killing. Before the deal was announced, the company’s stock price was actually $50 a share, just a modest drop from its 52-week high of just over $63 a share; compared to many public tech companies, that’s a very limited valuation reduction from peak levels.
Thoma Bravo will pay $65.25 per share in cash for SailPoint, which sells enterprise security products.
To understand why the company is selling and why Thoma is buying Bravo, we need to take a look at the company’s results. Which brings us to the question of how the company is valued and what the price could mean for unicorns and other expensive startups. This is going to be fun and fast! Let’s go!