PE firms to take UserTesting private in $1.3bn deal

February 2023 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

February 2023 Issue

Private equity (PE) firms Thoma Bravo and Sunstone Partners have agreed to acquire customer feedback platform UserTesting in a deal worth $1.3bn.

Under the terms of the deal, the firms will pay $7.50 per share in an all-cash transaction – a premium of approximately 94 percent over UserTesting’s closing stock price on 26 October 2022 and a premium of approximately 97 percent over the volume weighted average price (VWAP) of UserTesting’s shares for the 30 trading days ended 26 October 2022. The deal will be financed entirely by cash from Thoma Bravo and Sushine Partners without additional debt.

The transaction, which was unanimously approved by the UserTesting board of directors, is expected to close in the first half of 2023, subject to customary closing conditions, including approval by UserTesting’s stockholders and the receipt of required regulatory approvals. The UserTesting board of directors unanimously recommended that UserTesting stockholders vote in favour of the transaction at the special meeting of stockholders to be called in connection with the transaction. Upon completion of the transaction, UserTesting’s common stock will no longer be publicly listed and UserTesting will become a privately held company.

According to a statement announcing the deal, upon closing of the transaction, the firms intend to combine UserTesting and UserZoom, which Thoma Bravo acquired majority control of in April 2022. UserTesting’s chief executive, Andy MacMillan, will lead the combined company.

Under the terms of the deal, there was a ‘go-shop’ period, which expired at 11:59 pm Pacific time on 10 December 2022, which would have allowed the UserTesting board of directors and its advisers to actively initiate, solicit and consider alternative acquisition proposals from third parties.

“We believe the combination of UserTesting and UserZoom will unlock tremendous value for our customers by further integrating and expanding the suite of research methods, testing types, and measurement options available – all while making the voice of the customer and human insight more accessible across an organization and easily integrated into their processes and workflows,” said Andy MacMillan, chief executive of UserTesting. “We are pleased to partner with Thoma Bravo and Sunstone Partners to build upon our award winning Human Insight Platform to further innovate in the CX space and continue to serve a growing number of teams and use cases.

“We are confident that this transaction – joining two complementary players in the customer experience space to form a new private company – offers the most compelling value creation for all of our stakeholders, and is a testament to the value of human insight, the UserTesting platform, our talented team, and loyal customer base,” he added.

“We live in a digital experience-first world, one where the quality of the user and customer experience will distinguish the winners from the losers,” said Alfonso de la Nuez, co-founder and chief visionary officer of UserZoom. “The combination of UserTesting and UserZoom’s solutions will help democratize experience insights to enable companies to make the right decisions, be innovative, and ultimately deliver experiences their customers love.”

“We are excited to bring together the complementary expertise of UserTesting and UserZoom to create a leading, integrated solution that delivers real-time, data-driven feedback to organizations globally,” said A.J. Rohde, a senior partner at Thoma Bravo. “Our acquisition of UserTesting is a testament to our belief that customer experience is mission critical to organizations, and the combined company will be well-positioned to further market expansion, accelerate innovation, and provide even greater insights to its customers.

“We look forward to leveraging the deep experience we have cultivated in the customer experience and user experience space to help the combined company capture the tremendous growth opportunities ahead,” he added.

Thoma Bravo struck several take-private deals in 2022, including cyber security firm SailPoint, as well as Ping Identity and cloud software company Anaplan.

Richard Summerfield