Zendesk’s final selling price is a warning shot for unicorns – TechCrunch

Zendesk this morning agreed to promote itself to an investor consortium for $10.2 billion in money, or $77.50 per share. The deal comes months after the U.S. software program firm declined a $17 billion supply.

The Zendesk saga of 2021 and 2022 has been sophisticated, filled with twists and turns. That it’s closing out its life as a public firm by promoting at a reduction to a deal it rejected earlier within the 12 months underscores each how quickly the market has repriced the worth of software program revenues and the way a falling share value can result in administration decisions at the moment that run counter to that very same management workforce’s perspective a number of quick quarters in the past.

Let’s run by a refresher on the deal itself, focus on the ultimate price ticket in mild of Zendesk’s newest earnings outcomes and shut with a brief riff on what the transaction may portend for unicorns and smaller public expertise corporations alike.

How did Zendesk get right here?

At this time’s information doesn’t look like a superb signal for undervalued SaaS corporations, however Zendesk has navigated various tough challenges all through this 12 months that led to this inauspicious conclusion. First, it turned down that $17 billion supply in February, a transfer we reported on the time that made activist investing agency Jana very sad. Whereas Jana fumed, Zendesk continued to function based mostly by itself sense of its worth — one, by the best way, that TechCrunch agreed with in our evaluation of that spurned deal.

If Zendesk believed it was price extra, why promote? But there was extra occurring than that.

At about the identical time, Zendesk had been making an attempt to finish a deal to purchase Survey Monkey’s father or mother firm, Momentive, for $4.1 billion. Zendesk believed that this deal would speed up income in the long term and push the corporate into the rising subject of buyer expertise. As soon as once more, Jana wasn’t happy, and it and different traders rejected the deal, leaving Zendesk in a clumsy place with no speedy method to make up the projected income it believed was coming from that deal.

Zendesk execs went again to the drafting board and accomplished a strategic assessment simply two weeks in the past, vowing at that time to stay unbiased, a transfer that resulted in a punishing day on Wall Avenue with its inventory plunging in worth. That stood till this morning, when the corporate determined the perfect transfer was to promote.

Does the worth make sense?