In a significant move for the tech industry, website-building platform Squarespace has announced its decision to go private in a $7 billion private-equity deal with Permira. This major development comes after a period of struggles and underperformance as a publicly traded company. Squarespace’s founder and CEO, Anthony Casalena, expressed enthusiasm about partnering with Permira and embarking on a new phase of the company’s journey.
The Private-Equity Deal
Permira, a leading private-equity firm, will acquire Squarespace in an all-cash deal valued at $6.9 billion. The agreement represents a premium of approximately 30% to Squarespace’s unaffected share price. The deal has received approval from major shareholders, including Accel and General Atlantic, as well as CEO Anthony Casalena himself. Following the transaction’s closure, these stakeholders will retain their investments in Squarespace.
Motivation Behind Going Private
Squarespace’s decision to go private aligns with a growing trend among smaller technology companies in recent years. Some have chosen to retreat from the public markets, either due to disappointing market support or the belief that they can unlock greater value by operating within a private-equity portfolio. Squarespace faced challenges in capturing sustained public-market support since its listing in 2021 and hopes that going private will provide the necessary environment for growth and innovation.
Competitive Landscape and Market Response
Squarespace competes in the website-builder and e-commerce marketplace, where it faces competition from industry players like Wix and Shopify. The news of the private-equity deal has been met with positive market response, as Squarespace’s shares rose nearly 13% to $43 per share in pre-market trading. This surge reflects investor confidence in the company’s future prospects under the guidance and support of Permira.
Supporting Squarespace’s Growth Potential
Permira’s involvement in the deal signifies its belief in Squarespace’s untapped potential. The private-equity firm aims to leverage its expertise and resources to unlock further growth opportunities for Squarespace. David Erlong, a partner at Permira, expressed excitement about partnering with Anthony Casalena and his team, emphasizing the commitment to support Squarespace in realizing its full potential.
Industry-wide Implications
Squarespace’s move to go private is part of a broader trend observed in the tech industry, with smaller technology companies opting for private ownership. These companies recognize the potential benefits of joining forces with private-equity portfolios, which can provide strategic guidance, operational expertise, and financial resources to fuel growth. Notable examples include Qualtrics and Toshiba, which both made similar transitions in recent years.
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