Steve Jennings/Getty Images for TechCrunch
Qualtrics CEO Ryan Smith, center.
- Just as Qualtrics was about to go public this week, SAP convinced Qualtrics to sell itself to SAP for $8 instead.
- The biggest winner of this deal is the Smith family, a father and two of his sons, who founded this company in 2002.
- Qualtrics' partners Accel, Insight and Sequoia will also take home major chunks of the deal.
Qualtrics was just about to go public -- in fact, was planning on ringing the bell this week. But then, SAP made Qualtrics a massive all-cash offer that the Qualtrics board just couldn't refuse.
On Sunday, SAP announced it would acquire the Utah-based cloud software company for $8 billion. Qualtrics was originally set to follow its competitor SurveyMonkey, which went public in September. Qualtrics had planned to raise $424 million to $495 million had the IPO taken place, and would have been valued at $4.8 billion at its mid-range price.
Qualtrics is a fast-growing, profitable company that had earned nearly $300 million in its last fiscal year. The IPO roadshow, where Qualtrics was pitching institutional investors, was going so well with so many investors wanting in, that Qualtrics CEO Ryan Smith hinted shares would likely have been priced higher than its initial range, he told Business Insider. That means that the company would likely have started its IPO day valued at more than $5 billion.
Even so, by selling to SAP for $8 billion instead, all of Qualtrics stakeholders arguably walked away a lot wealthier.
Business Insider doesn't know exactly how much each of Qualtrics' investors and cofounders made in the sale, but according to regulatory filings and one source familiar with the company, the largest owners of the company were the Smith family who had a 45.5% stake, followed by its venture capitalist investors, Accel with 16%, Insight with 15% and Sequoia with 9%.
Qualtrics is a family business founded in 2002 by brothers Ryan Smith and Jared Smith, their father Scott Smith, and Stuart Orgill. It had different classes of shares, with its founders and investors holding preferred stock. We don't know if Qualtrics' preferred stock commanded a higher share price from SAP than its common stock. We only know the total amount SAP paid, $8 billion.
Still, just for fun, we did some back-of-envelop math anyway based on the assumption that all shares got an equal slice of the $8 billion. Here are the biggest winners along with what we estimate is each one's take:
- The Smith family is by far the biggest winner. Based on our math, they should be taking home at least $3.6 billion. The Smith brothers are now tech's newest billionaires.
- Accel is another big winner, collecting a good $1.3 billion.
- Insight comes in at about $1.2 billion.
- and Sequoia made at least $720 million.
Qualtrics famously bootstrapped itself into a profitable company with $50 million in revenue, not taking any venture funding for its first decade, CEO Smith previously told Business Insider.
But once it decided to take on investors, it raised a lot of money, $400 million total, and was last valued at $2.5 billion.
Still, no matter how you slice it, an $8 billion cash offer is a good one.