Medallia Acquisition: Key Details, Impact, and What Comes Next

Thoma Bravo's acquisition of Medallia for $6.4 billion marks a significant milestone in the customer and employee experience management industry. This strategic move underscores the growing importance of software solutions that leverage AI and machine learning to drive business outcomes. The acquisition is expected to provide Medallia with enhanced resources and flexibility to innovate and expand its market impact.

What Is Medallia?

Founded in 2001, Medallia specializes in experience management software, offering solutions for customer experience, employee experience, contact centers, and market research. Its enterprise-grade platform includes features like feedback capture, AI-driven analytics, and robust security. Medallia stands out with its AI leadership, global impact, and flexible pricing options. The company is recognized for high ROI and industry accolades, making it a trusted partner for large-scale operations.

Who Acquired Medallia?

Thoma Bravo is a leading private equity investment firm specializing in the software and technology sectors. With over 40 years of experience, the firm focuses on providing capital and strategic support to help technology companies grow. Key services include private equity investments, strategic guidance, and involvement in Environmental, Social, and Governance (ESG) initiatives. Thoma Bravo manages over $166 billion in assets and has completed more than 500 transactions, solidifying its position as a top player in the industry.

When Was Medallia Acquired?

Thoma Bravo announced its acquisition of Medallia on July 26, 2021, and completed the transaction on October 29, 2021. This acquisition occurred during a period of rapid growth in the experience management market, driven by the increasing importance of customer and employee experiences. The timing also aligns with a broader trend of private equity firms investing heavily in technology companies, particularly those with strong SaaS and AI capabilities, to capitalize on their growth potential.

Why Was Medallia Acquired?

• Market Expansion: The acquisition will allow Medallia to expand its customer reach and build on its innovation leadership. With significant revenue growth from $313.6 million in 2019 to $477.2 million in 2021, Medallia is well-positioned to capitalize on the growing experience management market, projected to reach $23.83 billion by 2027.
• Technology Integration: Medallia's SaaS platform leverages proprietary AI and machine learning technology to provide predictive insights. Thoma Bravo's investment will support further technological advancements and integration, enhancing Medallia's ability to deliver personalized and predictive insights across various channels.
• Competitive Advantage: The acquisition strengthens Medallia's position against competitors by bolstering its innovation capabilities and market offerings. With a differentiated portfolio of cloud technology solutions and a loyal customer base across diverse industry verticals, Medallia is set to maximize value for stakeholders and maintain its leadership in the experience management market.

Acquisition Terms

• Acquisition Price: $6.4 billion
• Payment Method: All-cash transaction
• Key Conditions or Agreements:
  • Medallia shareholders will receive $34.00 per share in cash.
  • The price represents a premium of approximately 20% to Medallia’s unaffected closing stock price on June 10, 2021, and a premium of approximately 29% to Medallia’s unaffected 30-day average price.
  • The Medallia Board of Directors unanimously approved the transaction.
  • Thoma Bravo entered into voting agreements with Medallia’s directors, executive officers, and affiliated investment funds, representing approximately 34% of Medallia’s outstanding shares.
  • A 40-day "go-shop" period expiring on September 4, 2021, during which Medallia could solicit alternative acquisition proposals.
  • The transaction was announced on July 26, 2021, and approved by Medallia shareholders on October 14, 2021.
  • Debt financing for the transaction was provided by Blackstone Credit, certain funds managed by affiliates of Apollo Capital Management, L.P., KKR Credit, Thoma Bravo Credit, and Antares Capital.
  • Medallia’s common stock has ceased trading and is no longer listed on the NYSE.
  • Medallia will remain headquartered in San Francisco.

Impact on Medallia

The acquisition of Medallia by Thoma Bravo has led to significant changes in the company's operations and management. Medallia has transitioned to a private company, providing it with additional resources and flexibility to innovate. The company will continue to be headquartered in San Francisco, and its common stock has ceased trading on the NYSE. This shift allows Medallia to benefit from Thoma Bravo's operating capabilities, capital support, and deep sector expertise, positioning it for long-term growth and market expansion.

In terms of product offerings and services, the acquisition is expected to bolster Medallia's leadership in the experience management market. With Thoma Bravo's support, Medallia aims to enhance its SaaS platform, leveraging AI to provide personalized and predictive insights. While specific employee and customer reactions were not detailed, the strategic benefits and future growth opportunities highlighted by executives suggest a positive outlook. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly, ensuring a smooth and efficient transition.