Squarespace to Go Private in $6.9B All-Cash Transaction with Private Equity Firm Permira

[DevinMix]

Summary

Long-time LTT sponsor Squarespace has announced a $6.9B deal with private equity firm Permira which will result in the company going private. The cost of the deal is approximately 29% higher than Squarespace's 90-day valuation and approximately 15% higher than the company's valuation at close on Friday, May 10th 2024. Squarespace founder and CEO Anthony Casalena will continue to serve as CEO and Board Chairman of the company. The transaction was "unanimously approved and recommended by a Special Committee of the Squarespace Board of Directors" who "considered several factors which will be outlined in public filings to be made by Squarespace." [1]

 

Quotes

Quote

"Squarespace has been at the forefront of providing services to businesses looking to establish themselves online for more than two decades. We are excited to continue building on that foundation, and expanding our offerings, for years to come," said Anthony Casalena, Founder and CEO of Squarespace. "We are thrilled to be partnering with Permira on this new leg of our journey, alongside our existing long-term investors General Atlantic and Accel, who strongly believe in the future of Squarespace." [1]

Quote

Andrew Young, Partner at Permira, added, "The Squarespace ecosystem provides SMBs with a broad offering – from demand generation to powerful payment solutions, all seamlessly interwoven with intuitive GenAI. We share Anthony and the team's vision to further invest in these tools to help customers grow." [1]

 

My thoughts

While I don't currently make use of Squarespace, this deal raises some concerns for me due to private equity now being in control of Squarespace's substantial asset portfolio. It's worth noting that Squarespace was the designated recipient of any Google Domains registrations not transferred to other platforms after that service was shut down in September of last year. While changes for end users aren't guaranteed as a result of this buyout, private equity firms have a reputation for cutting large amounts of staff and increasing costs for customers. This isn't a huge deal for developers/businesses using Squarespace strictly as a DNS registrar since they can just move elsewhere. As the article points out though, there are plenty of small-to-medium businesses making use of Squarespace right now for their entire online presence. This makes them particularly vulnerable to any price hikes that may come in the interest of profits.

 

Obviously a good portion of this story extends beyond tech and into the realm of business and investing. Still though, I hold that it could potentially have large-scale ramifications for small-scale ecommerce as a whole. More broadly, I worry that it could lead to a repeat of the same trend seen elsewhere in Silicon Valley, in which companies lock in customers at low prices before hiking said prices once it's difficult to migrate elsewhere.

 

Sources

[1] https://investors.squarespace.com/news-events-financials/investor-news/news-details/2024/Squarespace-to-Go-Private-in-6.9B-All-Cash-Transaction-with-Permira/default.aspx

[Levent]

The very same company that fucked Teamviewer as a product.

https://www.permira.com/news-and-insights/announcements/permira-funds-to-acquire-leading-software-firm-teamviewer-from-gfi-software

 

More on Permira,

 

They dont necessarily destroy the companies they own but restructure in a way to make it more profitable. Permira did play their hand well with TV.

https://www.bloomberg.com/opinion/articles/2021-10-11/permira-scored-big-with-teamviewer-so-why-s-teamviewer-doing-poorly

 

So you can imagine how this is going to end for squarespace. Prices or the quality will take a hit for sure.

[DevinMix]

For some additional context regarding Permira:

• https://old.reddit.com/r/sysadmin/comments/yv1svv/teamviewer_has_lost_us_as_a_customer_be_wary/iwgq3vm/
• "Permira focuses on the technology, consumer, services and healthcare sectors. High profile investments include Acuity Knowledge Partners, Clearwater Analytics, Engel & Völkers, McAfee, Neuraxpharm, Reorg, TeamViewer and Zendesk."
  https://en.wikipedia.org/wiki/Permira

[StDragon]

lol, and people will jump off once the rates are increased to pay off that 6 billion investment.

 

Dumb dumb dumb!

[leadeater]

4 hours ago, DevinMix said:

private equity firms have a reputation for cutting large amounts of staff and increasing costs for customers.

Broadcom would never do that to VMware 

 

3 hours ago, DevinMix said:

McAfee

Ehhhhhh, yuck

[wanderingfool2]

13 hours ago, DevinMix said:

This makes them particularly vulnerable to any price hikes that may come in the interest of profits.

Honestly as a private company, there is actually chances that they take less profits.  This would be because they can do things that are more efficient, while not needing to answer to shareholders.  Honestly, there are a lot of publicly traded companies that have become terrible simply because they have to almost hit metrics to appease the shareholders [or the CEO's trying to hit those metrics because it means a payout].

 

With that said, McAfee and TeamViewer doesn't look promising.

[CarlBar]

5 hours ago, wanderingfool2 said:

Honestly as a private company, there is actually chances that they take less profits.  This would be because they can do things that are more efficient, while not needing to answer to shareholders.  Honestly, there are a lot of publicly traded companies that have become terrible simply because they have to almost hit metrics to appease the shareholders [or the CEO's trying to hit those metrics because it means a payout].

 

With that said, McAfee and TeamViewer doesn't look promising.

 

The problem is those pressures are even worse with private equity firms. As long as it makes them more money than they paid it can crash and burn long-term and they don't care, they made their money back and thats all that really matters.

 

The real issue in both cases is a focus on short term profit at the expense of long-term ones.

[wanderingfool2]

11 hours ago, CarlBar said:

 

The problem is those pressures are even worse with private equity firms. As long as it makes them more money than they paid it can crash and burn long-term and they don't care, they made their money back and thats all that really matters.

 

The real issue in both cases is a focus on short term profit at the expense of long-term ones.

You can find though that there can become less pressure to grow at a certain point though with a private business; which tends to push things more towards long-term goals.

 

With publicly traded businesses you get the constant push for growth even at the expense of long-term goals simply because you have a lot more people voting who plan to make money in lets say the next year before dumping the stock.

 

Not saying that it doesn't happen privately though, but there is more pressure on a publicly trade company to continue making more profits.

[jagdtigger]

RIP........

[Monkey Dust]

The segment is far from a monopoly. It's not the biggest deal if Squarespace shitifies. 

[Kisai]

On 5/13/2024 at 9:19 AM, DevinMix said:

Su

 

My thoughts

While I don't currently make use of Squarespace, this deal raises some concerns for me due to private equity now being in control of Squarespace's substantial asset portfolio. It's worth noting that Squarespace was the designated recipient of any Google Domains registrations not transferred to other platforms after that service was shut down in September of last year. While changes for end users aren't guaranteed as a result of this buyout, private equity firms have a reputation for cutting large amounts of staff and increasing costs for customers.

Look at how Cpanel is being abandoned once acquired by private equity and suddenly charging highway robbery prices for licences.

 

Basically people operating servers using cpanel keep asking "how can I get rid of this albatross", especially as they have been dropping features and introducing "subscription" features without any way to revert.

 

[StDragon]

7 hours ago, Kisai said:

Look at how Cpanel is being abandoned once acquired by private equity and suddenly charging highway robbery prices for licences.

 

Basically people operating servers using cpanel keep asking "how can I get rid of this albatross", especially as they have been dropping features and introducing "subscription" features without any way to revert.

 

AKA, rent-seeking.

 

That's why I prefer OSS with paid 3rd party vendor support if desired; it keeps the playing field relatively honest.

[williamcll]

On 5/14/2024 at 4:29 AM, leadeater said:

McAfee

 

Ehhhhhh, yuck

Did McAfee go bad before or after john died?

[leadeater]

2 hours ago, williamcll said:

Did McAfee go bad before or after john died?

It's always been crapware like most of them. All the paid ones that signed deals with OEMs to come pre-installed and had scare tactic trial expiry messages are scummy.