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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

#121

Post by hhreefgguu »

vessenes wrote: post #114
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…

Those numbers don't tell you that Squarespace is a pig with lipstick. It might be one! But, SAAS economics treat the ability to hit near-zero profitability as a feature of the business model, not a problem. Here's why -- income is taxed, and growth is rewarded, heavily, in the valuation of the company. If every dollar of business you make is worth $6 (Roughly $1.2bn in revenues = $7bn buyout), and every $1 of new bus…

The people that don’t get this are the people that want their startup to turn a profit by next Tuesday.

You mean to tell me the best thing you can do with that revenue is put it in your pocket? There’s no way to spend it on your business to make more money? Sounds like you don’t have much of a startup then.

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

#122

Post by lxgr »

ziddoap wrote: post #69
Vvector wrote: post #29

Earlier quoted context omitted.

It was announced in mid-2023, and google sent out numerous emails to account holders over the last six months. https://support.google.com/domains/answer/13689670?hl=en Feel free to migrate your domains somewhere else. I chose CloudFlare

> It was announced in mid-2023 The Squarespace acquisition of Google domains was announced, yes. I don't recall seeing anything about Squarespace immediately going private and being beholden to an investment firm showing up in those emails. > Feel free to migrate your domains somewhere else. Thanks for the permission, that's exactly what I and I'm sure many others are about to do. Too bad the timing of this announcem…

Oh wow, did they actually do this as a registrar transfer (rather than by Squarespace stepping in as Google Domains' sucessor)?

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

#123

Post by prepend »

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.

Also the model of squarspace is that they have your site and you can’t port it to another provider. So usually a customers options are “pay the new price or rebuild your site.”

And there’s lots of small businesses who could probably afford to pay $2k/year instead of $100.

I expect that prices will really go up. I always avoided squarespace because I didn’t like the idea of paying a monthly fee “just” to host content. I mean, Wordpress has flaws but at least you design once and then host on one of the billion Wordpress servers. And if one gets uppity or sells to PE, you can just switch.

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

#124

Post by adtac »

insane_dreamer wrote: post #101
adtac wrote: post #83

Earlier quoted context omitted.

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

it has to be high enough to give the board enough cover that they're doing their fiduciary duty to existing shareholders

Maybe I'm missing something basic but that still doesn't explain why it's 30% and not 50%.

I don't think purely qualitative arguments work here.

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

#125

Post by sgc »

smaudet wrote: post #71
itsoktocry wrote: post #32

Earlier quoted context omitted.

> 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. So what's the best ownership structure? Public companies have their issues (short-term thinking), acquisitions have their issues (getting closed down)... I mean, cutting costs and upping prices isn't awesome for the customer, but do you have more faith in a…

> do you have more faith in a company that's scraping by versus working to be profitable Working to be profitable is not correlated with well-functioning. Its usually correlated with enshittification ( https://en.wikipedia.org/wiki/Enshittification ), and poor functioning. The most profitable (at least in the short term) is to provide a costly product that you took no time to produce, with zero support.

When I read the comment you are responding to, I just chuckled and thought of Amazon, which famously did not turn a profit for decades and nevertheless, proved to be one of the best run companies during that period (for investors - obviously their treatment of employees is miserable).

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

#126

Post by daveaiello »

I think a lot of tech companies are getting lost in a situation where Venture Capitalists ideally want to invest in companies that will eventually fit in the large capitalization growth stock category. But many tech companies will never fit that model.

Squarespace is an example of a company that was never going to fit that model, for a host of reasons.

Furthermore, if a company is highly unlikely or never going to become a large cap growth stock, providing extra working capital, acquiring ancillary services, funding additional advertising and marketing, will not change those prospects. Only revolutionary increases in functionality will.

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

#128

Post by tam123--- »

Karellen wrote: post #82
skhunted wrote: post #43

Earlier quoted context omitted.

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…

The point poorly expressed is that public markets transactions are highly scrutinised, and it is easy for shareholders to be highly litigious toward the directors.

The directors therefore have a strong incentive to only accept offers at a normal premium to current price, which seems to be about 30% by back of the cigarette packet maths.

Bidders therefore have an incentive to bid around 30% so their bids are more likely to be accepted.

The key thing is an incentive to avoid liability and get deals done. If the equilibrium was 80% then bids would be all at 80% and there would be less of them.

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

#130

Post by psini »

zer00eyz wrote: post #55
jpgvm wrote: post #39

This makes the Google registrar change even worse. I need to get my act together and transfer my .dev domain. :/

This was my visceral reaction as well, but does it really make the change worse? There are tons of business that are private that are doing great. I host with OVH they are private, lots of the businesses I have worked for have been private. Candidly without the pressure of "this quarter" it might be a good thing for Squarespace.

If we are talking about the same french hosting company, they have been public since late 2021
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