Private equity firms Vista Equity Partners and Blackstone are reportedly nearing a deal to acquire collaboration-software maker Smartsheet in a transaction that could value the company at close to $8 billion.

The buyout firms are, according to a report from Reuters, discussing an offer of around $56 per share for Smartsheet, the news wire’s sources said, adding that the deal could be signed in the coming weeks, barring any last-minute complications.

This potential acquisition would mark one of the largest take-private transactions of the year, coming at a time when the market anticipates that the US Federal Reserve will begin cutting interest rates, potentially sparking an increase in leveraged-buyout activity.

Smartsheet's software allows organisations to manage, track and automate their workflow using a single platform, offering more features and capabilities than Microsoft's Excel. The company focuses on large corporate clients with complex operations, such as Pfizer, Cisco and American Airlines, serving 85 per cent of Fortune 500 companies, according to its website.

The talks between Vista, Blackstone and Smartsheet have been ongoing for some time. Reuters first reported earlier this month that the private equity firms were in discussions to acquire Smartsheet. Since Reuters initially reported in July that the company was fielding interest from potential acquirers, Smartsheet's shares have risen more than 16 per cent.

To finance the takeover, Vista and Blackstone have been in discussions with direct lenders, the sources revealed. However, they cautioned that terms could change as negotiations progress.

Smartsheet recently reported second-quarter earnings that exceeded market expectations, driven by robust growth in orders from new enterprise customers. Morningstar analysts wrote in a 6 September note: "Smartsheet is effectively navigating the tough macro environment, and we still believe the company will gain traction with its new pricing strategy and product improvements."

If successful, this deal would surpass many other significant take-private transactions this year, though it would still fall short of Silver Lake's $13 billion buyout of talent agency Endeavor Group, which currently stands as the largest such deal in 2023, according to LSEG data.

The potential acquisition reflects growing interest in software companies that cater to enterprise clients, particularly those offering solutions for workflow management and collaboration. Smartsheet competes with other players in this space, such as Asana and Monday.com, though it differentiates itself by targeting larger enterprises.

As of Monday, neither Vista Equity Partners nor Smartsheet had responded to requests for comment, while Blackstone declined to comment on the matter.

The ongoing negotiations highlight the continued appetite for tech acquisitions among private equity firms, despite broader economic uncertainties. If completed, this deal could signal renewed confidence in the market for large-scale tech buyouts and potentially encourage similar transactions in the coming months.

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