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Thoma Bravo takes another bite out of public infotech space with Coupa deal

Thoma Bravo LP plans to further consolidate the information technology sector as the private equity firm takes out one public company after another.

The firm said on Dec. 12 that it will join Abu Dhabi Investment Authority to pay $81 per share for Coupa Software Inc., an enterprise resource planning and spending management company. The per-share price pencils out to $6.17 billion, according to 451 Research, valuing the Coupa enterprise at $8.0 billion.

The price represents an approximately 30% premium over Coupa's market capital in the days prior to the announcement. However, the premium does little to make up for Coupa's loss of market capital from its peak in 2022.

Year-to-date through the Dec. 12 close following the announcement, Coupa shares were still down by 50.2%, compared to a loss of 28.8% for the Nasdaq. And the $81-per-share bid is less than a quarter of where the stock was trading at its $369.64 record-high close in February 2021.

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Thoma Bravo and other private equity firms have been using the 2022 sell-off in the public markets to get cut-rate deals on major tickers, 451 Research analyst Melissa Incera said in a Dec. 12 report. Thus far in 2022, acquirers have snapped up a record amount of market capital from public exchanges — about $400 billion — largely driven by private equity firms that are still holding plenty of capital in the face of the downturn.

For Thoma Bravo specifically, the Coupa deal is the firm's sixth take-private acquisition from a major U.S. exchange this year, with the total valuations for those deals reaching $29.11 billion.

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While the firm saw similar metrics in 2021, the past two years represent a massive spike in take-privates compared to prior years. Across all its entries, Thoma Bravo's assets under management jumped to $105.81 billion at the end of 2021 from $45.02 billion at the end of 2019. About three-quarters of its assets at the end of 2021 were IT holdings, according to S&P Global Market Intelligence data.

Despite the pressure on prices for public assets, Thoma Bravo is still paying significant multiples in its infotech land grab. In 2021, when valuations were at record highs, the firm valued its public-market acquisitions at 8.3x their trailing-12-month revenue, according to 451 Research data. Thoma Bravo has paid a median multiple of 10.9x trailing revenue for its 2022 take-privates.

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Coupa follows that trend, with the $8 billion enterprise value landing at 9.8x trailing revenue.

The transaction is Thoma Bravo's second largest for the year, behind only its $10.70 billion bid for Anaplan Inc. Announced in March, during the early days of the market downturn, the private equity firm valued that publicly traded enterprise software company at 17.6x its trailing revenue. The Anaplan deal closed in June.

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451 Research is part of S&P Global Market Intelligence