Subscription management firm Zuora to go private in $1.7bn deal with Silver Lake and GIC

American enterprise software company Zuora Inc. (NYSE: ZUO) has signed a definitive agreement to be acquired by Silver Lake, the leading global tech investment firm, in partnership with GIC, Singapore’s sovereign wealth fund, for a whopping $1.7 billion. The acquisition is set to transform Zuora into a privately held entity, unlocking new growth opportunities as a private firm. Zuora is recognized for its leading monetization suite designed to support complex pricing, billing, payments, and revenue accounting for modern subscription-driven companies. Its customer base includes big names like Caterpillar, The New York Times, and Zoom, helping them evolve their revenue models and maximize customer relationships for growth. Zuora is based in Silicon Valley but also has offices across the Americas, EMEA, and APAC regions.

Zuora provides a leading monetization suite designed to build, run, and grow a modern business through a dynamic mix of usage-based models, subscription bundles, and everything in between. From pricing and packaging to billing, payments, and revenue accounting, Zuora’s flexible, modular software platform is crafted to help companies evolve monetization strategies with customer demand. More than 1,000 customers around the world, including Caterpillar, The New York Times, and Zoom, rely on Zuora’s combination of technology and expertise to convert recurring relationships into recurring revenue growth.

Deal Details: Key Price and Premium

Silver Lake and GIC will pay $10.00 per share in cash for Zuora’s outstanding common stock. This represents an 18% premium over the company’s unaffected closing stock price. The transaction was unanimously approved by a special committee comprising independent directors of Zuora’s Board, including Jason Pressman and John D. Harkey, Jr., reflecting their strong support for maximizing shareholder value.

Zuora Founder Sees Growth in Subscription Economy

Zuora’s Founder, CEO, and Chairman Tien Tzuo highlighted the importance of this acquisition for driving their growth in the Subscription Economy, noting, “As a private company, with Silver Lake and GIC’s expertise, our monetization suite will continue to lead the marketplace.” Tzuo sees this acquisition as the beginning of an exciting new chapter for Zuora, with renewed focus and resources aimed at supporting their 1,000+ customers worldwide.

Independent Review and Special Committee Findings

The special committee, led by Jason Pressman, conducted a thorough review of strategic options before landing on this acquisition. Over 30 parties were approached, and a comprehensive due diligence process was carried out with 10+ parties. The proposal from Silver Lake and GIC was determined to offer the best risk-adjusted value for Zuora’s shareholders. Pressman emphasized that the deal would provide “significant, immediate, and certain value.”

Independent director John D. Harkey, Jr., part of the special committee, elaborated on their extensive search for the ideal strategic partner, citing Silver Lake and GIC’s proposal as the final, fully-financed option that best supported Zuora’s vision and strategic goals.

Strategic Vision and Investor Confidence

Silver Lake’s Managing Partner, Joe Osnoss, and Managing Director, Mike Widmann, have expressed confidence in Zuora’s capabilities as the leader in monetization solutions. They underlined Silver Lake’s commitment to supporting Zuora in expanding its offerings for subscription-based businesses. GIC’s Chief Investment Officer, Choo Yong Cheen, echoed similar sentiments, stating their excitement in partnering to bolster Zuora’s market leadership in the burgeoning Subscription Economy.

Timeline and Conditions

The transaction is expected to close in Q1 2025, pending regulatory approvals and approval from Zuora stockholders. The acquisition will result in Zuora’s delisting from public stock exchanges, as the company focuses on scaling growth privately. Notably, Tien Tzuo will roll over a significant portion of his ownership, continuing as a long-term investor and CEO to lead Zuora’s growth journey.

Advisory Teams

Qatalyst Partners served as the exclusive financial advisor to Zuora’s Special Committee, while Goodwin Procter LLP provided legal counsel. On the other side, Simpson Thacher & Bartlett LLP and Dechert LLP acted as legal advisors to Silver Lake and GIC respectively.