The self-proclaimed “software company in a private equity wrapper” is taking another enterprise software company private. Vista Equity Partners has agreed to buy Apptio for $1.94 billion.
The deal, announced Sunday, is priced at $38 per share in cash, which represents a 53% premium over the Friday closing price of Apptio shares. However, the price is below Apptio’s 52-week intraday high of $41.36, which it hit two months ago just after it posted a surprise adjusted quarterly profit.
In late October, however, Apptio reported third-quarter results that included weaker-than-expected billings, pressuring its shares. It also reported negative free cash flow of $1.1 million for the third quarter, down from a positive $8.6 million in the quarter a year ago.
Apptio’s tools help CIOs and other executives track and measure the effectiveness of technology investments. The take-private deal, just two years after Apptio went public, will help the company accelerate its growth and maintain its commitment to creating “wildly successful customers,” said Sunny Gupta, cofounder and CEO of Apptio.
Apptio said it had multiple offers from strategic and private investors before it agreed to go with Vista’s.
Vista’s operating model for its tech investments differs slightly from that of other firms. Each of its companies runs independently. But the investment firm has 120 people in a central operations group “that is constantly trying to find new ways to improve how software companies run,” according to PC Magazine.
After going through Vista’s operational process, from acquisition to sale, the typical tech firm has 20% more employees and is two to three times faster at releasing code, says Vista CEO Robert Smith.
The Apptio deal has been unanimously approved by Apptio’s board but does contain a go-shop provision. The transaction is expected to close in Q1 2019 and is not subject to a financing condition.