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Vista Equity Partners Set To Make Over $50 Million On Thoma Bravo’s $6.6 Billion Stamps.com Buyout

Two of the fiercest competitors in the private equity world are poised to win from the same deal.

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On Friday, software and technology-focused private equity giant Thoma Bravo unveiled a $6.6 billion deal to take Stamps.com private at $330 a share. The deal for Stamps.com, which sells digital shipping solutions for small businesses and mid-size companies, was struck at a 67% premium to its trading price on Thursday, making billions for shareholders. Among them is Vista Equity Partners, considered Thoma Bravo’s biggest competitor in the software private equity market.

For many years, Vista Equity has run an internal public equity portfolio, where it builds toehold positions in publicly-traded software and technology companies it finds intriguing. With 406,975 Stamps.com shares according to data provider Sentieo, the company was Vista’s largest public toehold position. (That figure excludes its public positions in Ping Identity, Jamf and Datto Holdings, which it recently took public, and Lightspeed POS, which acquired Vista portfolio company Upserve for cash and stock in December.)

Vista Equity will make about $54 million based on Thoma Bravo’s valuation of Stamps.com and its holdings worth about $134 million as of Thursday. (Our calculations assume Vista Equity maintained its position from the first quarter.) According to Forbes’ analysis of Vista’s public equity portfolio, it owns over 25 U.S. technology stocks worth over $600 million as of the first quarter, including positions in Bill.com, ServiceNow, CloudFlare, CrowdStrike, Nice, Pluralsight, Shift4 Payments, Qualtrics, and Hubspot. Vista also owns stock in Thoma Bravo portfolio company Dynatrace.

If Vista was a losing bidder on the Stamps.com LBO, it will at least take solace in generating a tidy profit from its stock position. Filings indicate Vista built its position in the first quarter of 2021. In that quarter, disappointing earnings caused Stamps.com’s stock to plunge nearly 40%, from $276 a share to $170 in early February. Had Vista built its position at the February lows, it would have nearly doubled its money.

Vista Equity and Thoma Bravo declined to comment.

Other shareholders benefitting from the Stamps.com deal include Disciplined Growth Investors, Fisher Asset Management, and Simcoe Capital Management.

Stamps is part of a flurry of deals for Thoma Bravo in 2021, which include the take-private of RealPage for $10.2 billion, completed in April. Later that month, it struck a $12.3 billion buyout of publicly traded software company Proofpoint. Earlier in July, it completed a deal to take Israel-based mobile application company IronSource public via its Spac called Thoma Bravo Advantage.

“As the first company to introduce online postage and an early innovator in e-commerce shipping software, Stamps.com has established itself as a key technology solution in worldwide e-commerce,” said Holden Spaht, the partner at Thoma Bravo leading its Stamps.com deal, in a press release. Thoma Bravo is betting that it can expand Stamps’ ecommerce shipping solutions for businesses, especially as many companies adopt hybrid office strategies that will spread workers out.

In 2020, Spaht led Thoma Bravo’s sale of mortgage software giant Ellie Mae for $11 billion, which netted Thoma Bravo a $9 billion windfall.

For years, Stamps.com has been a battleground stock on Wall Street, attracting vocal short-sellers who have criticized its stamp deals with the U.S. Postal service and see it as a business with obsolescence risks given the rise of email. However, the company is growing its top-line fast as e-commerce grows, and it carries fat margins that appeal to buyout investors.

In 2020, revenues rose 32% to $758 million, gross margins were 76%, and adjusted earnings before interest and taxes were $264 million, a 35% margin. Stamps.com is also unleveraged, sitting on net cash of about $400 million, according to Sentieo data.

Financing for the buyout will bypass major investment banks. Instead, Thoma Bravo will raise what likely will be billions in debt capital from Blackstone Credit, funds managed by Ares, Canadian pension fund PSP Investments, and its own credit operation, Thoma Bravo Credit.

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