Blackstone Goes BIG (Again) With New $8.4 Billion Acquisition...

Well that didn’t last long. After Blackstone Inc. ditched its ownership of Motel 6 for $525 million on Monday, they’ve now partnered with Vista Equity Partners to make use of their newfound extra cash. The target? Acquiring Smartsheet Inc., the Bellevue-based work-management software company for a cool $8.4 billion. 

(Source: CNBC) 

ICYMI, (since this deal means absolutely nothing to anyone outside the Valley), Smartsheet is kinda like the lovechild of a spreadsheet and a project management tool (think Monday.com or Asana, but with a little more corporate swagger). And Blackstone and Vista are about to be proud new parents. 

Interesting, more details please…

(Source: Giphy) 

In short, Smartsheet stockholders are getting $56.50 a share in cash, which, let’s be real, is a pretty sweet deal. That’s a 41% premium on the company’s average share price over the last three months. Translation? If you’ve been holding Smartsheet stock, congrats — it’s payday.

With that said, the company has been on the market for a hot minute, shopping around for a buyer. And considering the state of the tech market (read: higher interest rates and economic slowdown worries), it’s no surprise someone swooped in even though the stock has absolutely ripped +18.90% YTD. 

(Source: Investing.com)

But, make no mistake, even with the buyout… Smartsheets has definitely come a long way. It IPO’d in 2018 at $15 a share and was recently valued at around $5 billion — not too shabby for a bunch of cloud-based project tracking tools. But with 90% of Fortune 100 companies as customers, it’s clear as to why this acquisition is a no brainer. 

(Source: MarketBeat) 

Smartsheet, while little known, has been holding their own in the work management Hunger Games against Asana, Monday.com, and Trello (Atlassian’s baby) - with revenue hitting $586 million last year. Additionally, their growth has posted a whopping 40% year-over year. 

But, but, but… when it comes to profit - well, that’s where things get sketchy. You see, Smartsheet is still in the "spend all the money to make all the money" phase, dropping $145 million in losses last year. But hey, in this new age of tech, it’s all about growth. Who cares about making money, amirite?

(Source: Giphy) 

So what exactly does this do for Blackstone and Vista? Well, let’s all remember, private equity firms don’t exactly have a reputation for being sentimental. They see Smartsheet as cash-flow potential waiting to be unlocked. Blackstone, already knee-deep in workplace tech after its $2.8 billion buyout of AI darling Anthropic last year, is looking to beef up its productivity portfolio. And Vista? They’ve been hanging around enterprise software companies longer than cloud storage has existed, with names like Datto, Finastra, and NAVEX already under their belt.

(Source: Inc.com) 

So for them, it's all about owning software that’s deeply embedded in corporate workflows. Smartsheet is sticky — once a company starts using it, it's hard to quit. Plus, there's plenty of room to cross-sell additional tools and services. Translation: more $$$.

On the other hand though, the deal’s not set in stone just yet. There’s a 45-day "go-shop" period, meaning paramount nightmares Smartsheet can flirt with other potential buyers during this time. So unless someone comes in with an even bigger bag of cash, Blackstone and Vista are locking this down by January.

(Source: Giphy) 

In the end, this is clearly a power move for Blackstone and Vista as they are betting big on the continued relevance of work-management software in an increasingly hybrid and tech-driven business world. And even though Smartsheet may not be profitable (yet), private equity muscle has shown to cause some serious shifts in how a company operates. Which could be good… or bad. 

What’s my take on the matter though? Well unless you’re a shareholder about to get 41% premium in your pocket, it’s still a toss-up in how all this plays out. Especially with the 45-day shop period as a catch.

(Source: Giphy) 

In the short term, I’d expect some wild volatility as potential buyers come and go, but if Blackstone and Vista can successfully ink the deal… well then the sky's the limit. Because let’s be honest, if Blackstone can sell Motel 6 for a whopping half-billion, they can pretty much do anything in my book. 

In the meantime, keep a close eye on this story going forward and as always stay safe and stay frosty, friends! Until next time… 

Stocks.News doesn’t hold any positions in companies mentioned in the article.