Bain Capital and Hellman & Friedman are leading the race to acquire DocuSign Inc . (NASDAQ:DOCU), the prominent online signature service provider with a market valuation of around $12 billion, according to a Reuters report today, which cited people familiar with the matter.
DocuSign shares closed 9.4% higher on Thursday. The stock is up a further 1.1% in pre-market Friday.
This potential acquisition is poised to be one of the largest leveraged buyouts of 2024. The two private equity firms are in the advanced stages of negotiation, with the possibility of collaborating to seal the deal.
A conclusion to this high-profile auction is expected in the coming weeks, according to Reuters.
Blackstone (BX) was also in the initial discussions but has since withdrawn from the bidding process.
The interest in DocuSign, known for enabling digital signing of documents, has been surging. The company, which debuted on the public market in 2018, has recently reported a significant uptick in its financial performance, including a rise in quarterly earnings and revenue growth.
This acquisition scenario unfolds at a time when the leveraged buyout market is recovering from a period of high financing costs, marking a possible resurgence of major transactions in the tech sector.
For Bank of America analysts, the private equity buyout seems "a logical exit for DocuSign."
"While we view DocuSign as an attractive asset, we view the 7.3x trailing twelve months exit multiple as rich given the slower growth profile of DocuSign (we model to +9%, +6%, and +7% y/y revenue growth for FY24E, FY25E, and FY26E, respectively)," they said.
"A takeout multiple, if any potential deal happens is likely to be lower in our view."
On the other hand, Wells Fargo analysts see a risk to stock as premium is now baked in "if deal does not close or becomes less competitive."
"We are surprised by the suggestion of multiple bidders, given our view that DOCU is facing a challenging fundamental backdrop (including competitive pressures), leaving mgmt with limited options for organic improvement. We expect the deal value would likely prove lower if not a competitive process."