Private equity firm Thoma Bravo has inked a $6.4 billion deal to acquire Medallia Inc., a publicly traded provider of analytics software that helps enterprises measure customer sentiment and align their business activities with buyers’ expectations. 

Medallia announced the deal this morning. The company also said that it will launch a 40-day “go-shop” period to determine if there may be other potential buyers who might place a higher offer.

If no prospective acquirer outbids Thoma Bravo and the $6.4 billion transaction receives regulatory approval, Medallia’s investors will receive $34 per share. The sum represents a 20% premium to the price at which Medallia shares traded before reports emerged about a potential acquisition. Compared with the company’s unaffected average stock price in the last 30 days, Thoma Bravo’s offer amounts to 29% premium.

San Francisco-based Medallia provides a cloud platform that companies can use to measure customer sentiment. The platform tracks customer sentiment by analyzing information from online reviews, surveys, social media posts, technical support tickets and numerous other sources. Medallia’s algorithms distill this data into high-level statistics that enable a company’s decision-makers to assess customer expectations at a glance.

Medallia says its platform has a massive range of applications spanning multiple departments in a company. Marketing teams use it to quantify how well consumers respond to advertising campaigns. A software development team, in turn, can harness Medallia’s platform to determine whether an upcoming feature it’s planning to add would be popular among users. There are applications outside the consumer market as well: Medallia says business-to-business sales teams use its platform to identify ways of improving the client onboarding process.

Thanks partly to the fact its platform can be useful in many different situations, Medallia has managed to amass a sizable enterprise customer base. Hewlett Packard Enterprise Co., Oracle Corp. and Comcast Corp. are among the companies using its platform. Across all its customers, Medallia generated revenue of $128 million in its most recent quarter ended April, a 16% improvement from a year ago.

“We are eager to build on our success and begin the next phase of differentiated growth, and we believe that becoming a private company represents the best opportunity to do just that,” Medallia President and Chief Executive Officer Leslie Stretch said in a statement. “In addition to maximizing value for our shareholders, this transaction will enable us to execute on our long-term strategy with even greater effectiveness, efficiency and flexibility.”

One way going private may make it easier for Medallia to pursue long-term goals is by allowing the company to avoid the investor pressure to boost profits that publicly traded firms often face. Medallia listed on the New York Stock Exchange in 2019 and wasn’t yet profitable as of its last fiscal quarter. The company closed the three months through April 30 with a net loss of $48.8 million, up from $31.9 million a year earlier.

Several of Medallia’s key investors support the proposed acquisition by Thoma Bravo, increasing the likelihood of the deal going through. The company said today that shareholders with a combined 34% stake have already agreed to support the deal. The transaction is expected to close by year’s end.

With the resources of Thoma Bravo, one of the tech industry’s most prolific investors, at its disposal, Medallia could potentially create more competition for rival Qualtrics International Inc. in the customer experience management segment where they compete. Qualtrics provides cloud-based tools for measuring customer sentiment. The company, which is publicly traded and majority-owned by SAP SE, last quarter boosted revenues by 34%, to $249.3 million.

“Medallia’s ability to provide personalized and predictive insights across every channel and to companies of all sizes has become mission-critical in a rapidly expanding universe of structured and unstructured data, where more and more business is transacted digitally,” said Scott Crabill, a managing partner at Thoma Bravo. “We look forward to partnering with Leslie and the talented Medallia team and applying our operational and investment expertise in software to support the company in the next phase of its growth journey.”

The proposed $6.4 billion acquisition of Medallia is the latest in a string of big-ticket enterprise software deals that Thoma Bravo has announced recently. In April, the private equity firm announced plans to buy cybersecurity provider Proofpoint Inc. for $12.3 billion. In March, it inked a $2.4 billion deal for Talend SA, which makes software that helps organizations move data between internal systems more easily. 

Photo: Medallia