Zendesk Property The saga took several new turns this week, with an outside investor, Jana Partners, campaigning against the company, a review of its strategic options coming to an end and the business software maker deciding to remain independent.
Now worth less than $10 billion, Zendesk has made more noise in recent months than you’d expect from a company of its size. But after announcing it would buy Momentive (SurveyMonkey) for more than $4 billion last year, Zendesk has been in a deadly battle with outside investors that has proven to be recurring.
Even though Jana wasn’t terribly in love with the SurveyMonkey deal (to put it mildly), Zendesk thought it was a way to drive revenue growth and steer the company away from purely service-related tasks. assistance – and, to a lesser extent, customer relations. management, or CRM – in the customer experience market. Zendesk suggested in an investor presentation that the deal could help it boost its revenue from about $1.39 billion, the run rate it was at in November 2021, to $3.5 billion. 2024, which Zendesk said was ahead of schedule.
Whatever Zendesk was selling regarding Momentive, however, Jana wasn’t buying, and the tenor of the conversation between the company and its shareholder only grew strained over time. Zendesk did its own thing, ignoring Jana’s increasingly stringent demands outlined in letters to the company and in public statements. That includes the threat of lawsuits this week if Zendesk doesn’t immediately call a shareholders’ meeting.
Jana wants to sell Zendesk. Earlier this year, Zendesk turned down a $17 billion offer to sell the company, which, as we wrote at the time, “irritated” Jana. The offer came from a consortium of private equity firms, and it’s easy to imagine why founder and CEO Mikkel Svane, who built Zendesk from the ground up, didn’t want to go that route. Emotion aside, a TechCrunch analysis at the time concluded that the deal undervalued the company.
That Zendesk ended up in some sort of selling process should come as no surprise. We’ve seen some big corporate deals over the past two years, including Broadcom’s recent announcement to buy VMware for $61 billion, which is still under a go-shop provision and subject to regulatory review. . Prior to that, some big software deals made include Salesforce buying Slack for nearly $28 billion, Oracle buying Cerner for the same price, and Microsoft buying Nuance Communications for $19 billion.
It should be noted that the above agreements took place in a different economic environment. Whether it’s justified, markets have pulled back and venture capital dollars are tightening. Valuations are falling everywhere. As such, it would make sense that even if Zendesk wanted to sell itself, now might not be a particularly good time to do so.
The company accepts. Zendesk had a chance to take the money and run away, but they thought it was actually worth more than the offer – at least at the time. Does the rejected $17 billion offer from earlier this year look any more attractive in light of the continued decline in the value of tech companies? Certainly, but sufficient to cast doubt on the decision to decline? Let’s find out.
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