Recent news of Silicon Valley Bank and Credit Suisse has taken center stage and drowned out other significant moves in the market. One example is the $12.5 billion acquisition of Qualtrics by Silver Lake and CPP Investments. Qualtrics is a customer and employee experience management company that offers a cloud-based software platform to help businesses collect and analyze customer feedback and employee engagement data.
Qualtrics’ solution capabilities have long attracted fans in the enterprise sector. They include a comprehensive platform for feedback management, user-friendly interface, analytics, strong customer support, and integration with other enterprise-scale tools. Customers include the likes of Uber, Coca-Cola, and Pfizer.
Qualtrics has also been the subject of several high-profile acquisitions in a relatively short period of time – one that may give some customers pause as the vendor finds itself again under new ownership.
A Timeline of Qualtrics Acquisition History
In November 2018, German enterprise software company SAP announced that it would acquire Qualtrics for $8 billion, just days before Qualtrics was set to go public. The acquisition was considered a surprise move, as Qualtrics had been planning an initial public offering that would have valued the company at around $4.8 billion. Instead, SAP offered a premium to acquire the company outright, citing the strategic value of combining Qualtrics’ customer experience insights with SAP’s operational data.
The acquisition was completed in January 2019, making Qualtrics a wholly owned, independently operated subsidiary of SAP. The acquisition was intended to enable Qualtrics to expand its capabilities and reach, while theoretically also giving SAP a stronger foothold in the rapidly growing market for customer experience management software. SAP eventually spun the business out as an independent publicly traded company.
The vendor performed well in its first year as a public company, with shares typically trading above its $30 IPO price. But in the last few years, Qualtrics’ market value has declined precipitously from a high of $28 billion in early 2021 to a low of around $5 billion at the end of 2022. According to TechCrunch, Silver Lake and CPP Investments’ all-cash offer seems like a fair price. The transaction is expected to close in the second half of 2023, after which Qualtrics will once again be a fully private entity.
What’s Next for Qualtrics?
With SAP giving way to PE firms who were already minority owners, this marks yet another new chapter for Qualtrics and any customers that are invested in its use. What will play out still remains to be seen, but SAP and Qualtrics never seemed like a perfect fit and SAP’s decision to focus on its core business (which will necessitate significant layoffs) underscores a possible win-win for both businesses. In a scenario where the vendors remain solution partners, Qualtrics may benefit from being free to connect to other SAP competitors in the market.
The backing of a major private equity firm could now mean Qualtrics is set to expand capabilities, which could be a double-edged sword for customers. On one side, innovation investment is a positive thing particularly as enterprise IT vendors begin to more fully realize the power of AI, predictive analytics, etc. On the flipside, however, is the likelihood of higher prices. NPI recommends businesses take a look at any existing investments in the CX/EX space as a result.
Qualtrics Customers Should Review Current Agreements ASAP
With the unknowns of this acquisition, NPI advises customers to review any existing Qualtrics pricing and contract terms. If these elements are favorable, now is a good time to renew any agreements ahead of time.
While we don’t yet know the changes the new owners will implement within Qualtrics’ business, the vendor’s leadership looks to be mostly intact. With that in mind, we don’t anticipate any noteworthy shifts in vendor behavior for the next 12 to 18 months – but customers should remain vigilant.
Those Invested in Medallia, InMoment, SurveyMonkey, Adobe Experience Cloud, and Other Competing Solutions May Want to Review Pricing Ahead of Renewals
In many ways, Qualtrics could see a huge benefit from decoupling itself from SAP, a match that many believed never made sense in the first place. Now with massive private equity resources from Silver Lake and CPP, Qualtrics could see a big jump in solution quality in the coming years. However, this means that main competitors like Medallia, InMoment, Adobe, SurveyMonkey, and others will likely see an increase in pricing pressure from the market, especially if Qualtrics becomes more of a standout.
Changes in market pricing will reframe what constitutes fair market value pricing for CX/EX software purchases. Customers should be sure to perform IT price benchmarking on any purchases and renewals to make sure they’re paying a best-in-class price in the context of the most recent market pricing intel.
NPI’s IT price benchmark analysis and vendor negotiation intel can help you secure a world-class outcome for your CX/EX purchase or renewal. Contact us to learn more.
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