Private equity firm Permira is acquiring Squarespace Inc., a major provider of website development and hosting tools, in an all-cash transaction worth $6.9 billion.

The companies announced the deal today. Squarespace investors are set to receive $44 per share, a 15% premium over the Friday closing price. 

Squarespace launched in 2003 and raised its first outside investment seven years later. The company’s last funding round, a $300 million raise that closed in March 2021, valued it at $10 billion. It floated its shares on the NYSE about two months later with an initial market capitalization of $6.6 billion.

The year before it went public, the software maker generated $621.1 million in revenue. By the end of 2023, Squarespace’s annual sales had jumped to more than $1 billion. The company’s adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, more than doubled in the same time frame.

Squarespace generates most of its revenue from selling website hosting plans. Customers receive access to not only cloud infrastructure, but also tools that speed up tasks such as registering a domain name and designing landing pages. A built-in template library removes the need to build everything from scratch.

Two of Squarespace’s hosting plans, which are marketed under the Commerce brand, are specifically geared towards online stores. They include marketing features that merchants can use to display shopping suggestions and create product waitlists. The more expensive of the two Commerce subscriptions also provides the ability to offer discounts and free shipping.

Squarespace’s Commerce revenue segment, which encompasses its tools for online merchants and the fees it charges to process e-commerce purchases, grew 11% year-over-year last quarter. The company’s Presence segment, which includes its standard website hosting plans, grew twice as fast. The latter business accounted for about two-thirds of the $281.1 million in revenue Squarespace generated during the quarter.

The company expects to end 2024 with sales of between $1.19 billion and $1.2 billion, a 19% improvement over last year on the high end of the range. Unlevered free cash flow is expected to range from $298 million to $318 million.

Squarespace founder and Chief Executive Officer Anthony Casalena, one of the company’s largest shareholders, is backing Permira’s acquisition offer along with intuitional stakeholders General Atlantic and Accel. Their combined holdings represent about 90% of the software maker’s voting shares. To go through, the deal will also have to win approval from investors who hold most of the remaining voting shares.

Casalena is set to roll over a “substantial majority” of his shares into Squarespace once it moves off the stock market, which is expected to happen before the fourth quarter. Afterward, he will continue to lead the company along with the rest of the current management team.

“Squarespace has been at the forefront of providing services to businesses looking to establish themselves online for more than two decades,” Casalena said. “We are excited to continue building on that foundation, and expanding our offerings, for years to come.”

Squarespace is the latest in a series of major tech firms that Permira has taken private in recent years. In 2022, it teamed up with several other investors to acquire customer service software provider Zendesk Inc. for $10.2 billion. Permira earlier bought email security provider Mimecast Ltd. for $5.8 billion. 

Photo: Squarespace