SAP will spin out its $8B spin-in Qualtrics acquisition – theinformationsuperhighway

Well, that's not a story you see every day.

Less than two years after German software giant SAP snapped the Qualtrics experience management platform for $ 8 billion before the startup's IPO debut, the company has now decided to outsource the company as part of a brand new IPO.

SAP agrees to buy Qualtrics for $8B in cash, just before the survey software company’s IPO

In a press release published on Sunday, SAP announced that Qualtrics had recorded cloud growth of "over 40 percent" in a quote attributed to SAP CEO Christian Klein. The company continues to be led by founder and former CEO Ryan Smith, who came to SAP with Qualtrics and led the organization within the German conglomerate.

SAP retains the majority of the new outsourcing. Interestingly, the statement stated that “Ryan Smith intends to be Qualtrics largest single shareholder. "

SAP's press release is vague, but implies that the Qualtrics move offers more flexibility to connect with customers and partners outside of the parent company's control.

I am sure that my equity colleague Alex Wilhelm will have a lot more to analyze tomorrow with his column The Exchange, but SAP's rapid turnaround in the acquisition is a big surprise. While private equity firms take a business privately and sometimes reverse it quickly on an IPO, it is rare for a large company like SAP to make such a dramatic last-minute deal for a company to reverse that decision just a few months later close.

Given the heated market for SaaS markets these days, the path for Qualtrics' return to public markets appears to be clear, especially if the soon-to-be-independent company's metrics have proven their worth since our last financial data release. As Wilhelm and his Crunchbase news team wrote back during the S-1 filing:

Unlike most companies going public this year, Qualtrics is not a garbage heap of losses incurred under the growth name. It shows that you can grow and not lose every dollar you have at the same time.

Back then, "isn't a garbage fire" was a high standard, but Qualtrics was indeed an outperformer in its peer group. Assuming these fundamentals haven't changed, Qualtrics and Smith are looking for a real win and SAP's savings ahead of the strategic plan they decided to make in the midstream.