Silicon Valley tech investment firm Silver Lake, in partnership with Canada Pension Plan Investment Board, announced late Sunday it had entered into an agreement to acquire Utah-born customer experience innovator Qualtrics in an all-cash deal worth $12.5 billion.

Under terms of the agreement, Qualtrics shareholders, including majority owner SAP, will receive $18.15 per share in cash. This represents a 73% premium to the 30-day volume-weighted average price on Jan. 25, 2023, the last full trading day prior to SAP’s announcement to explore a sale of its stake in Qualtrics, and a 62% premium relative to the unaffected closing price on Jan. 25, 2023, according to a press release issued by Silver Lake and Qualtrics.

Silver Lake said Qualtrics will continue to be led by Chief Executive Officer Zig Serafin, and the company will remain headquartered in Provo, Utah and Seattle, Washington.

“I couldn’t be more excited for this step in our journey,” said Ryan Smith, Qualtrics founder and executive chairman, in a statement. “Silver Lake’s belief in our vision and their amazing track record of helping founders and management teams speaks for itself. We look forward to working together and driving category-defining growth to build the next great enterprise cloud platform.”

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Silver Lake participated in Qualtrics’ 2021 IPO and, before the sale agreement, held a stake in the company just shy of 4.2%. Silver Lake, based in Menlo Park, California, is a technology-focused investment firm that holds around $92 billion in assets and is also heavily invested in another Utah-based company, property management software developer Entrata.

German software giant SAP acquired Qualtrics in November 2018 when it inked a mammoth deal to acquire the Utah-born customer experience innovator for $8 billion.

At the time, it stood as the highest valued acquisition ever for a venture-backed software company and, adding to the drama of the moment, the deal was announced just days before Qualtrics was scheduled to launch its own IPO.

Back in 2018, some market watchers criticized SAP for overpaying, noting Qualtrics’ pre-IPO valuation estimates were coming in at the $4.5 billion to $5 billion range.

But just two years later, that naysaying was rendered moot when SAP spun Qualtrics off in an IPO that raised $1.5 billion in fresh capital on a valuation north of $15 billion.

Qualtrics’ IPO redux in 2021 came just weeks after Smith was announced as the new majority owner of the Utah Jazz after closing a deal rumored to be worth $1.6 billion.

Smith kept a stake in Qualtrics following the IPO, and is reportedly the biggest individual shareholder while SAP retained a majority interest in the company.

In a January financial report, SAP revealed details on plans to reduce its global workforce by thousands, refocus on its core business ventures and put its 71% share of Qualtrics stock up for sale.

“We are further focusing our portfolio in areas where we are strongest to continue our accelerated growth,” said Christian Klein, CEO of SAP, during the company’s fourth-quarter 2022 earnings call, per CNBC. “This led us to announce today that we intend to carry out a very targeted restructuring in select areas of the company that will impact up to 3,000 positions and include a headcount reduction of about 2.5%.”

Klein added, “What this is really about is a very targeted effort to further streamline our portfolio and concentrate investments on the areas where we clearly can have the most positive impact.”

Those areas do not, apparently, include maintaining the company’s controlling interest in Qualtrics.

On the same call, SAP’s chief financial officer, Luka Mucic, said while the company pursues liquidation of its position in Qualtrics, it would remain partners with the company which is co-headquartered in Provo and Seattle.

“We have had a very successful collaboration on the go-to market and technology front with Qualtrics and we absolutely will continue this,” Mucic said.

In a January press release, SAP said both it and Qualtrics stand to benefit from a potential stock sale.

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“SAP believes that this potential transaction could unlock significant value for both companies and their shareholders: for SAP, to focus more on its core cloud growth and profitability; for Qualtrics, to extend its leadership in the XM category that it pioneered,” the release read.

SAP reports that since it acquired Qualtrics, the company has increased annual revenues by 3.5 times to approximately $1.5 billion “while delivering profitability, and has significantly expanded its offerings and enterprise customer adoption.”

Qualtrics was founded in 2002 by Ryan and Jared Smith based on technology first developed by Ryan and his father, BYU researcher and professor Scott Smith, amid the elder Smith’s fight (it was successful) against throat cancer.

Initially conceived of as a survey tool for academics, Qualtrics morphed into a set of tools and deep data analysis optimized for assessing clients’ business vitality, as viewed through the eyes of their clients and/or employees. This new set of analytics and insight theory has grown to become its own business category, and Qualtrics is both the progenitor and leader of the customer experience realm.

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