Blue Prism Acquired by Vista Equity Partners for £1.095 Billion

Blue Prism Acquired by Vista Equity Partners for $1.5 Billion

The robotic process automation (RPA) market has experienced significant growth recently. A key player, Blue Prism, has been acquired by Vista Equity Partners for £1.095 billion (equivalent to $1.5 billion USD), as documented in a recent filing in Great Britain.

This acquisition marks a notable event, as it represents the first instance of a deal involving one of the top three vendors within the RPA sector, amidst a wave of smaller RPA startups being acquired by larger organizations.

Deal Structure and Background

Vista utilized a newly established entity, Bali Bidco Limited – indirectly owned by Vista Funds – to facilitate the purchase. The precise rationale behind this financial structure remains unclear.

Ultimately, Vista is integrating Blue Prism into its existing portfolio company, Tibco, which was originally acquired in 2014 for $4.3 billion.

According to filings, Blue Prism had been actively evaluating its strategic options since its annual general meeting in March of the previous year. The company acknowledged facing both strategic and operational challenges.

“The Blue Prism Board considered various strategic options, taking into account the headwinds the company faced, the risks associated with execution, and feedback from shareholders,” the company stated in the official filing.

Leadership Perspective

A sale was determined to be the optimal course of action for the company. Jason Kingdon, Chairman and CEO of Blue Prism, believes this move will strengthen its position.

“The combination with Vista and Tibco will ensure we maintain leadership in the evolving landscape of intelligent automation. We will be able to broaden our product offerings through Tibco’s global reach and technologies,” Kingdon explained in a statement. “Furthermore, as a private entity, we will gain enhanced access to capital for new growth initiatives, including product development and potential mergers and acquisitions.”

Financial Performance Analysis

An examination of Blue Prism’s past operating results provided context for the decision to sell. For the six months ending April 30, 2021, the company reported revenue of £80.4 million (approximately $108 million USD).

This revenue represented a 24% increase compared to the same period in the prior year, calculated on a constant-currency basis. Simultaneously, Blue Prism reduced its operating loss from £53.8 million (approximately $73 million USD) to £20.9 million (approximately $30 million USD).

Despite progress in reducing losses, the company’s growth rate was relatively slow considering its level of unprofitability. Prior to the deal announcement, Blue Prism’s valuation had decreased, reflecting investor concerns.

Vista is offering a premium for the company through Bidco, although it is less than Blue Prism’s valuation earlier in the year.

Valuation Metrics

Extrapolating the H1 2021 revenue to a full year suggests Blue Prism is being sold for approximately 6.8x its annual revenue. This ratio provides insight into potential exit valuations for public software companies in the European market with similar growth rates.

Vista appears confident that the acquisition and integration with Tibco will yield positive returns.

Synergies Between Blue Prism and Tibco

Tibco, established in 1997, provides a comprehensive suite of automation services for connecting data sources across an organization. Blue Prism specializes in robotic process automation, automating routine tasks.

The combination of these capabilities is expected to be mutually beneficial, with Blue Prism enhancing Tibco’s position in the expanding RPA market.

Market Landscape and Future Outlook

Gartner’s recent report identified the leading vendors in the RPA space as UIPath, Automation Anywhere, and Blue Prism. IDC estimates the RPA market will reach $2 billion this year, with projected growth to $5.9 billion by 2024.

The industry has seen considerable consolidation, with larger companies acquiring smaller firms. Salesforce’s recent acquisition of Servicetrace and its integration with Mulesoft mirrors Vista’s strategy with Blue Prism and Tibco.

Mulesoft and Tibco are considered competitors in the broader automation landscape.

The deal is contingent upon shareholder approval from Blue Prism and standard regulatory clearances. Following the news, Blue Prism’s stock experienced a 2.12% decline.