The Big Bet Taking Cvent Private

SMITH BRAIN TRUST — Experts from the University of Maryland’s Robert H. Smith School of Business say the $1.65 billion takeover of event management specialist Cvent by a private equity firm reflects a long-range plan — unpalatable for public shareholders — to expand a tech company that's taken a wild ride since its 1999 beginning. The sale, announced Monday, launches a new phase for the McLean, Va.-based company whose stock had been falling after a billion-dollar IPO in 2013 and nearly going bankrupt following the dot-com bubble of 2000.

Smith School entrepreneurship lecturer Jonathan Aberman yesterday told the Washington Business Journal that strategic pivots, like Cvent’s latest, can be difficult — if not impossible — for a firm having to produce quarterly earnings reports and appease shareholders. “When you are a public company, you pretty much have to manage yourself quarter to quarter,” he said. “There aren’t a lot of long-term investors in the markets anymore.”

California-based Vista Equity Partners’ $36 per share purchase — at nearly 70 percent premium — almost doubles the percent premium on share price that Smith School finance professor Michael Faulkender says he would expect in such a deal.

Faulkender, director of Smith's Masters Program in Finance, told WBJ the move suggests Vista sees a financial upside to Cvent much higher than the $36 per share it offered and attainable by taking it private and freeing it from the short-term interests and share prices that can prevent long-term investment. “The private equity investors are not idiots,” Faulkender said. “The only way this is rational for them is that they think by taking it private and getting it focused they can get some big long-term gains.”