Amid slowing deal flow, another take-private deal has crossed the finish line.
KnowBe4, a platform for cybersecurity and anti-phishing education, finalized its acquisition Wednesday by Vista Equity Partners.
Vista acquired KnowBe4 for $4.6 billion in cash, or $24.90 per share. That represents a 10.9% premium to KnowBe4’s closing price before the Oct. 12 announcement.
Private equity firms with ample dry powder bought up hundreds of public companies in the past decade, but there are signs the whirlwind of mega-deals is coming to a halt—or at least slowing.
Taking public companies private became a widespread PE strategy in recent years as firms sought another avenue to deploy record levels of dry powder. In 2021 and 2022, cumulative deal value reached $422.1 billion across 173 deals, marking the highest value and number of total take-privates for a two-year period in the past 15 years, according to PitchBook’s 2022 Annual US PE Breakdown.
Even so, November 2022 was the first month without a take-private transaction in about 17 years, with the typical number being eight or nine deals per month. The pace has picked back up in the months since, but it’s nowhere close to historical levels. December had only four, including Thoma Bravo‘s $8 billion purchase of Coupa Software and Advent International‘s $6.4 billion acquisition of Maxmar Technologies.
The slowdown is a result of decreased access to debt financing amid rising interest rates. This is pushing deals to be more equity-heavy and putting companies with higher market caps out of reach. Larger players with deeper pockets, such as Vista and Thoma Bravo, will likely turn to midsize public companies as opposed to mega-buyouts.
But this lull won’t drag on. The pace of deals and their average size could rebound in the next nine to 12 months, or whenever interest rates plateau and financing becomes more accessible, said Steffen Pauls, CEO and founder of Moonfare, a digital platform that offers individual investors and advisers access to PE investments.
Related read: What the Future Holds for Private Capital
Featured image by wk1003mike/Shutterstock
Learn about our editorial standards.
