Anaplan Sold Image by Paul Brennan from Pixabay Thoma Bravo has announced that it has agreed to purchase Anaplan for approximately $10.7 billion in an all-cash transaction. Thoma Bravo is to pay $66.00 per share. This is a premium of 46% to the volume-weighted average price of Anaplan stock for the five days ending March 18, 2022. Once the transaction is completed, Anaplan will delist from the New York Stock Exchange.

While the price seems high, the shares were $66.39 on 21st October 2022. However, after it announced its Q3 results, its share price plummeted by 23% by the next day. According to the Motley Fool, the problem was that although growth looked good, 35.2%, its net dollar retention rate from existing customers was 19%. The net growth was only 19%, and losses remained high.

The story was the same in its Q4 results, with net dollar retention of 118% and growth of only 31.5% year over year. Whilst it might seem a strong quarter for many, the longer-term prospects remained an issue with investors.  Furthermore, the share price has not recovered.

Thoma Bravo saw the opportunity to invest in a strong, growing company but one that needed freedom from the stock exchange to have less concern quarter by quarter.

Holden Spaht, a Managing Partner at Thoma Bravo, commented: “Anaplan is a clear leader in Connected Planning, solving critical business priorities for the world’s largest enterprises as they implement strategic and complex digital transformations.

“We have followed Anaplan for years and have seen the incredible value they bring customers through their best-in-class planning platform. We look forward to leveraging Thoma Bravo’s extensive operational and investment expertise in enterprise software to support Anaplan in its future growth.”

Going for growth

Once it is private, the company can focus on accelerating its growth in the Financial Planning Software market. According to Reports and Data, that market is estimated to reach US3.47 billion as a CAGR of 14% by 28%

Tara Gadgil, a Partner at Thoma Bravo, commented: “Anaplan has built a tremendously successful business through product innovation and a rigorous approach to delivering value for their customers and partner ecosystem. We look forward to working closely with Anaplan’s talented and experienced team to continue delivering cloud-native SaaS solutions at scale.”

Frank Calderoni, Chairman and CEO Anaplan
Frank Calderoni, Chairman and CEO Anaplan

Frank Calderoni, Chairman and CEO Anaplan, also seems pleased with the acquisition. He commented: “We are thrilled to partner with Thoma Bravo to build on the strength of our innovative platform and capitalize on the massive opportunity and incredible demand we are seeing.

“This is a clear validation of our team’s outstanding work and the start of an exciting new chapter for Anaplan, our customers, and our partner ecosystem. We are confident that Thoma Bravo’s resources and insights will help us accelerate and scale our growth strategy.”

The press release is light on details about what will happen after the deal closes. However, it states:Thoma Bravo will use its significant experience supporting industry-leading, growing software franchises, as well as its financial and operational resources, to accelerate Anaplan’s strategy.

“Anaplan’s best-in-class innovative platform, time to value, and brand reputation will be priorities for Thoma Bravo. The intention is to attract and retain customers, employees, and partners to continue leading the large and expanding Connected Planning segment.”

Enterprise Times:  What does this mean

New, cloud-based planning applications are emerging. They are starting to target what Anaplan might have seen as its space. The investment in time to value is therefore critical. Anaplan needs to become more agile and deliver the flexibility it has not always achieved in the past. It may also see Anaplan look to move into the lucrative mid-market. Alternatively, it could expand into South America, where it has no presence.

This is a smart deal by Thoma Bravo. It has bought a company that is at a low ebb. One that might have recovered to a much higher share price if it had been left alone. Despite being of significant size and having significant growth, it was a fair target for a venture capital firm. What changes will Thoma Bravo make at Anaplan? Will it invest in a new leadership team, acquisitions, R&D or geographic expansion? Time will tell. It will probably look to exit the company through an IPO in a few years at a much higher price.

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