Vista Equity Partners continues to actively acquire enterprise-level businesses, and recently expanded its holdings with the acquisition of Gainsight. This company’s software is focused on customer success, designed to foster positive interactions between customers and brands, ultimately encouraging repeat business and referrals. Reports indicate the transaction was valued at $1.1 billion.

Both organizations have expressed optimism regarding the agreement, highlighting the potential for collaborative growth. Other companies, such as Ping Identity, have demonstrably benefited from becoming part of the Vista portfolio. Integration with a financially robust firm enabled them to make key investments that ultimately facilitated their initial public offering last year.

Gainsight and Vista are anticipating a comparable trajectory. Monti Saroya, co-head of the Vista Flagship Fund and a senior managing director, believes the company possesses significant growth potential, which can be realized with support from Vista’s consulting services, offering expertise in areas like sales, marketing, and operations.

“We are pleased to collaborate with the Gainsight team as they enter their next stage of development, assisting them in expanding the market they pioneered and providing even more solutions that enhance customer retention and drive business growth worldwide,” Saroya stated.

Gainsight’s CEO, Nick Mehta, welcomes the opportunity to join Vista’s network of enterprise companies, many of which already utilize Gainsight’s products.

“We have been familiar with Vista for some time, as 24 of their portfolio companies are Gainsight customers. We’ve observed Gainsight clients, including JAMF and Ping Identity, successfully partner with Vista and subsequently become publicly traded companies. We are confident that the field of customer success is still in its early stages, and we sought a long-term partner to help us advance. We are excited to work with Vista on this next chapter,” Mehta shared with TechCrunch.

Brent Leary, a principal analyst at CRM Essentials specializing in sales and marketing, suggests that Vista is assembling a comprehensive sales and marketing platform with potential for a future sale or public offering.

“The value lies not only in the platform’s capabilities but also in the financial resources behind it. Vista appears to be building an engagement platform through acquisitions like Gainsight, Pipedrive, and last year’s purchase of Acquia. Vista is willing to invest substantial capital if they believe they can generate even greater returns in a few years by successfully integrating these assets,” Leary explained to TechCrunch.

Although Gainsight is exiting as a unicorn, the outcome may not have been the company’s initial goal. According to PitchBook data, the company secured over $187 million in funding, although its fundraising activity had decreased in recent years. Gainsight raised $50 million in April 2017 with a post-money valuation of $515 million, and added $25 million in July 2018, followed by a smaller debt investment in 2019.

The company may have experienced a slowdown in growth, positioning it between securing new venture capital and achieving profitability. This scenario is often attractive to private equity firms like Vista, who can invest, restructure a company, and aim for a profitable exit.

Notably, Gainsight appointed a new chief revenue officer last month. Forbes reported the company was projected to reach approximately $100 million in ARR by the end of 2020, resulting in a revenue multiple of around 11x in the deal. This is below current market standards, potentially indicating lower gross margins compared to similar companies, or a deceleration in growth, as previously mentioned.

A $1.1 billion exit is a significant achievement – and every startup aspires to unicorn status – but given the prominence of Gainsight and Mehta, many anticipated the detailed insights that would have been revealed in an S-1 filing. Perhaps, with Vista’s support, that opportunity will arise in the future.