Blackstone and Vista to Take Workplace Software-Maker Smartsheet Private for $8.4 Billion

With $1 trillion in assets under management, Blackstone probably deals with more spreadsheets in a day than most people see in a lifetime. Soon, the private equity giant will own the software spreadsheets are made of.

The firm announced Tuesday that it partnered with fellow buyout expert Vista Equity Partners to take workplace software company Smartsheet private for $8.4 billion.

Terms of Indebtment

The first half of this year was a dud for deals: It added up to $1.5 trillion in deal volume, or 41% less than the $2.5 trillion two-quarter peak experienced in Q4 2021 and Q1 2022, according to PitchBook’s Q2 2024 Global M&A Report. The Blackstone deal — fresh off last week’s rate cut — is a potential sign of the thawing of an M&A ice age.

The lower levels of M&A activity “created pent-up demand (and supply), particularly in the private equity (PE) universe,” wrote PwC in a June report, adding that rate cuts “will be welcomed by dealmakers seeking to fund acquisitions via debt.” In fact, debt was a key sticking point in the Smartsheet deal negotiations:

• Bloomberg News reported that Blackstone and Vista had to make concessions to lenders involved in a $3.2 billion financing package to support the acquisition. Those include an interest rate of 6.5% over the Secured Overnight Financing Rate, the high end of an initial borrower ask of 6.25% to 6.50%.
• The terms also include a provision that would block the new owners from transferring IP to other entities out of their lenders’ reach, a sleight-of-hand trick that Vista performed with software company Pluralsight earlier this year.

If they don’t want to add to their debt, some trimming may be involved. According to Reuters, Smartsheet has recorded losses since it was founded in 2005, with the sole exception of this year’s second quarter. To be fair, the company, which says its software is used by 85% of Fortune 500 companies, has heavily prioritized growth.

Pacific Northbest: Bellevue-based Smartsheet — whose shareholders will get $56.50 per share, a 41% premium to the company’s unaffected volume-weighted share price — will be the second Seattle-area tech firm Blackstone has acquired this year, pending a 45-day “go-shop” period in which the company can consider other offers. Blackstone acquired pet-sitting service Rover for $2.3 billion in February.