Tech-focused PE firm Vista Equity Partners in December acquired Gainsight, a pioneer in customer success software, in a deal that values the venture capital-backed startup at a reported $1.1 billion after building a years-long relationship with CEO Nick Mehta. Gainsight, which develops software that allows companies to view and analyze customer data from a wide variety of sources including customer relationship management programs, was contemplating an initial public offering prior to the deal with Vista. Customer success is considered a burgeoning and important category for businesses. The startup had raised more than $150 million in venture capital from firms including Battery Ventures, Bain Capital Ventures, Bessemer Venture Partners, Insight Partners, Lightspeed Venture Partners and Summit Partners Venture Capital.

Greenfield Opportunity
Vista told Mergers & Acquisitions that the PE firm formed an interest in the company after recognizing that 20 of the enterprise software companies in its portfolio used Gainsight. While customer success tools have been rapidly adopted by software and technology companies, they have also been proven to drive value in any industry with recurring business sales, most notably in telecom, healthcare IT and professional services. From the insights garnered from its portfolio companies, Vista saw that an investment in Gainsight would represent an attractive opportunity to acquire a market leader in a growing end market, with substantial greenfield opportunity in both its core and adjacent markets. Vista said its focus on operational expertise and product superiority coupled with the experience of the Gainsight management team will allow the company to continue to rapidly innovate within its market while maintaining its people-first, customer-first approach with its clients.

Path to Public
The ultimate outcome for Gainsight is likely an IPO. Vista took its first portfolio company public in 2019, with Ping Identity, a developer of secure-access and authentication technology. In 2020, two of Vista’s enterprise software developers, Jamf and Datto, debuted.