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Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

investors.squarespace.com

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Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#81

Post by blackhawkC17 »

lotsofpulp wrote: post #41
blackhawkC17 wrote: post #14

It must be nice for the founder to pocket $2 billion in cash from selling his company. For users, on the other hand, I'll hardly trust a PE firm with a SaaS product. There's just too much incentive to jack up prices to service the debt taken to acquire Squarespace, and cut costs on customer support and building new features.

What is the source for the $2B figure? The most recent SEC filing shows the founder owns 2.8M class A shares, and there are 88M shares of class A shares outstanding and 48M shares of class B shares outstanding. I do not see why they would pocket 28% of the sale price. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001496963/5ba2ffc... https://investors.squarespace.com/news-events-financials/inv...

> As of December 31, 2021, the Reporting Person’s beneficial ownership consists of: (i) 387,500 shares of Class A Common Stock and 2,050,838 shares of Class B common stock, $0.0001 par value per share (“Class B Common Stock”) held directly by the Anthony Casalena 2019 Family Trust, for which the Reporting Person is the trustee, and

> (ii) 4,930,175 shares of Class A Common Stock and 40,835,572 shares of Class B Common Stock held directly by the Anthony Casalena Revocable Trust, for which the Reporting Person is the trustee. Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A Common Stock.

> The Reporting Person may be deemed to have voting power and dispositive power over the securities held by the Anthony Casalena 2019 Family Trust and the Anthony Casalena Revocable Trust.

https://www.sec.gov/Archives/edgar/data/1496963/000110465922...

He'll convert his 40 million+ Class B shares into Class A and sell them to Permira. His Class A and Class B shares total 47 million+.

At $44 per share, that sums up to slightly over $2 billion in cash.

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#82

Post by Karellen »

skhunted wrote: post #43
Karellen wrote: post #37

Earlier quoted context omitted.

Why is that a better rule of thumb than, e.g. 5%/10%/15%/20%?

Becuase it is the one that the system has evolved to consider the rule of thumb. The equilibrium appears to be 30% above asking and, and least local to our time period, appears to be stable.

I... what?

Great-Grandparent> most M&A transactions trend to have a 30% premium above the trading price. I [...] could not find a good explanation to why

You> It’s probably just a good rule of thumb.

Me> But why is 30% better than 15%?

You> The equilibrium appears to be 30% above asking

I still don't understand how that's supposed to explain why 30% is the stable value, instead of another, as the GGP was asking. How does what you are saying add anything more than "It is what it is" to the discussion?

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#83

Post by adtac »

cactusfrog wrote: post #6
berkeleyjunk wrote: post #2

It is interesting how most M&A transactions trend to have a 30% premium above the trading price. I have tried to investigate why but could not find a good explanation to why this number is so prevalent.

You have to pay enough to convince everyone to sell. The trading price is the marginal price of buying one more unit of stock, not a representation of the stock price at which every owner will sell.

That explains why there's a premium but not why the premium is ~30%.

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#85

Post by cduzz »

rqtwteye wrote: post #74
belter wrote: post #66

Earlier quoted context omitted.

Going from their financials, Squarespace makes no money: Revenues of $281.1 million for Q1 with Net Income of $0.1 million so it can be rounded to $0. They have debt of $556.9 million so yes, for the founder being able to pass on this pig with lipstick is great. Permira is well known for what was their management approach with AA in the UK, so for the employees this will probably mean massive layoffs soon. https://ww…

Something is really wrong in this market when even a "successful" company like Squarespace deson't manage to be a profitable business.

It sounds like investors invested billions of dollars making a product that makes million dollars per quarter?

So from that perspective, was this ever a successful company or just a grand party thrown by the investors? Isn't this just "how it works" ?

The vast majority of investors in the railroads lost their money; lots of people lost money running fiber around the world, iridium went bankrupt and lots of people use those phones, etc.

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#86

Post by AndrewKemendo »

I always wanna know who’s pushing these deals through because there’s like a handful of five or 10 people who are making this happen because they see some kind of “strategy” somewhere

Fundamentally these are the people who are fucking everybody over and it’s really literally just a handful of managers at these massive private equity funds

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#87

Post by klysm »

can16358p wrote: post #73

> Sorry, you have been blocked You are unable to access web.prd.q4inc.com > Why have I been blocked? This website is using a security service to protect itself from online attacks. The action you just performed triggered the security solution. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. What?? I'm just trying to open the page…

That will show up as a prevented attack in some dashboard

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#88

Post by berkeleyjunk »

adtac wrote: post #35
berkeleyjunk wrote: post #2

It is interesting how most M&A transactions trend to have a 30% premium above the trading price. I have tried to investigate why but could not find a good explanation to why this number is so prevalent.

The other replies explain the 30% with circular reasoning and I don’t find them convincing, so here’s a more absolute and testable hypothesis: at the average rate of S&P500 return adjusted for inflation, 30% is about 3-5 years of investment. What if that’s the average period of investment (i.e. time between buy and sell) for a typical retail investor for any given stock? If that’s the case, 30% is the minimum premium…

I thought about that too, but realized that it is double counting the returns. If you look at the Discounted Cash Flow (DCF) method for valuing the company, the current value of the company is already the sum of the discounted cash flows from the future. i.e. the next 3-5 year returns are already priced into the pre 30% hike value.

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#89

Post by etothepii »

jesprenj wrote: post #61

I don't understand how capitalism works now. So can people just forcibly buy stocks from you for $44 now?

It's not forcibly; a company is a group of people that sign a special type on contract (often called memorandum of association and bye-laws but other terms exist.)

That contract can govern all manner of different circumstances including the circumstances in which the allocation of shares are transferred.

Sometimes only a motion of the board is required, sometimes additionally a motion by a general meeting with various options for requiring super majorities across and within the different classes can be required too.

Fiduciary duties often require the Board to act in the objective best interest of the members.

In my opinion it is better model to think of a company as a club (hence shareholders often being called a Member) rather than something that you own.

Re: Squarespace to Go Private in $6.9B All-Cash Transaction with Permira

#90

Post by cduzz »

klysm wrote: post #78
rqtwteye wrote: post #74

Earlier quoted context omitted.

Something is really wrong in this market when even a "successful" company like Squarespace deson't manage to be a profitable business.

If growth is the goal, you sacrifice margin for revenue

And sometimes you sacrifice solvency as well?

Gambling on exponential growth and then having the growth fall short (say, because people moved their personal web sites to facebook instead of squarespace) is a risk in any time you go big or go home. Sometimes (often!) you ... go home.

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