With three major players in the CX SaaS space bought out by PE, I am wondering what’s the long term outlook for these three companies? Is it revamp, consolidation / merger, or chop up. There is certainly something interesting about this space that attracted the PE bosses to buy them out right. I think Medallia and Qualtrics are way too expensive to be bought out by another tech giant, and SAP experiment has already played out in front of us. I am lost as to what will come out of these PE aquisions? Enlighten me please!
PE are bunch of parasites. They’re going to load those companies up with debt, take the debt proceeds as a one-time special dividend, then sell to another PE company for their turn. Ultimately, the company will be a shell, managed for cash flows only. They’ll eventually eliminate most r&d, move whatever’s left off shore, and then, finally, the cash flows will no longer cover debt payments so they’ll declare bankruptcy. Sad. I’d never work for a company owned by PE.
Eh it was like that before being bought out too
Indeed I was talking with my friends. This is exactly what they do. The take great companies with great culture that are making money. The other companies doesn't worth it. They strip talented people and culture. Cutting salaries and benefit. Create a nice shell they can sell. And sell it for a great profit. The company then owns the promises, the debt and carried out with the people that can't manage it or achieve the goals because the good ones left. Who does a purchase of a company owned by PE???? Knowing that their objective is profit and not to make it grow???
Do you have the valuations of these handy. Felt that some of these other acquisitions were way over priced for the flattening of revenue I was seeing. Typically they hold, trim the fat, and package or cross sell among the portfolio companies. In this market, it would make sense to sell it at 4-5x if that’s the avenue SaaS co is thinking of going.
TBH I think that this is related to Elon's LBO of Twitter. PE thinks they can run these business like cashcows and implement their typical playbook. Prior to Twitter, I think a lot of Wall Street felt like running the PE playbook with Tech wouldn't work -- SaaS I think is a business model that's pretty similar to other traditional companies in PE companies' portfolio. I hope this experiment fails for them, because I would hate to see the ruthlessness of PE rear its head in the innovation tech space at large.
At their heart, they’re just surveys. There’s only so much you can do with that and I think growth is very limited. There is a use case in there since all the companies are still around, but ultimately it doesn’t make sense for them to be an independent tech player. I don’t see any scenario where they come out of PE as a fundamentally different company. In Qualtrics case though, would not be surprised if the Smith’s played another grift to cash out for a fourth time.
At its heart, Salesforce is just an online phone book.
Fundamentally, Qualtrics is "listen to your customers"
Will the PE acquisition for MNTV complete? The acquisition by Zendesk flopped
It'll get voted down if shareholders are smart.
In the hope of…what exactly?
Wow recently came out that Thoma Bravo was the high bid on Qualtrics with the idea of merging the two companies, but it fell apart due to anti trust concerns
Woah tea
There can be only one
Qualtrics will be sold as parts to the highest bidder in the next 18 months.
Drink all the champagne you want. We both know Medallia is nothing but parts with no bidders.
I think for Qualtrics and Medallia, they’ll add a few shiny new toys, strip out capabilities that don’t make sense (eg, Medallia bought a CRM at one point), repackage them as AI companies so they can get their valuation (because we all know that survey companies won’t get there), and sell to the next PE. There are companies in Thoma’s portfolio, as an example, that could be packaged with Medallia and create an amazing platform. For example, JD Power would be an interesting integration. Having industry-leading benchmarks next to your own experience metrics would be something enterprise clients would actually buy.
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Good post. I think PE is smart money and realizes that a lot of these SaaS companies only made it cause of easy money and zero interest rates. PE companies can buy them for cheap now, strip out 20-40% of the workforce and CAPEX, and make a nice profit