Does the buyout bode well for unicorn exit prices?
Good morning and happy Monday! It’s Early Stage week here at TC, which means that I have some prep work to do. That in mind, we’re briefly going to dig into SailPoint’s huge private equity buyout to divine what the transaction says about the value of technology companies.
The SailPoint sale comes amid a changing exit market for technology companies more broadly. Per exit data collated by CB Insights, while global M&A activity is stable thus far in 2022 compared to last year’s pace, IPO and SPAC exits fell sharply in the first quarter. That means that M&A is more important than ever for tech exits, making the SailPoint deal worth spending time on.
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From a high level, SailPoint’s exit is not a mercy-killing. Before the deal was announced, the company’s stock price was effectively $50 per share, down only modestly from its 52-week high of a little more than $63 per share; compared to many public technology companies, that’s a very limited valuation haircut 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 Bravo is buying, we’ll need to peek into the company’s results. That will bring us to the question of how the company is valued and what its price could mean for unicorns and other high-priced startups. This will be fun, and quick! Let’s go!