Private equity firm buying SciQuest for $509M

SciQuest, a Morrisville-based software company, is being acquired and taken private by private equity firm Accel-KKR for $509 million.

Accel-KKR is paying $17.75 per share for SciQuest, a 34 percent premium over the closing price of the company’s stock on Friday. The deal, which was announced Tuesday, is expected to close in the third quarter.

Under the terms of the acquisition, SciQuest may solicit other bids for the company during a 25-day “go-shop” period.

Publicly-traded Accel-KKR invests in software and IT businesses. It has owned SciQuest stock since 2014, and currently owns about 4.9 percent of the company’s outstanding shares. Accel-KKR has offices in Menlo Park, Calif., Atlanta and London.

SciQuest will continue to operate as a standalone business based in Morrisville. CEO Stephen Wiehe and his management team will remain in place.

“They see a lot of opportunity for acquisitions and they are looking to invest in the business to continue to grow it,” Wiehe said of Accel-KKR. “They are very concerned about retaining all the employees.”

SciQuest has 510 employees, including 327 in Morrisville.

SciQuest’s procurement technology enables customers to buy goods and services online more efficiently. Wiehe said the company continues to have strong growth among higher education and public sector customers. Its stable of commercial customers has also been growing faster than the overall business.

“We are getting bigger customers, bigger contracts,” he said.

SciQuest had revenue of $105.4 million last year, up 3.4 percent compared with the previous year. The company said in April that it is on track to record mid-to-high single-digit revenue growth in the fourth quarter of this year.

Wiehe attributed much of the growth to acquisitions the company has made in recent years, which has allowed it to add products and functionality to its core technology platform.

“We feel we have a very unique technology,” he said.

Founded in 1995, SciQuest went public in 1999 at the height of the dot-com boom. After the stock tanked, a California investment firm bought it in 2004 and took it private again.

Under Wiehe’s leadership, SciQuest slashed costs and jobs and revamped its business model.

Wiehe said he sees advantages in becoming a private company again.

“As a public company, there’s very much kind of a short-term focus on quarter-to-quarter revenue growth and quarterly results. With an investor like Accel-KKR their focus is very much more on the longer term,” Wiehe said. “It allows us as a company to focus more on what we can do over a longer period of time rather than trying to meet short-term Wall Street commitments.”

This story was originally published May 31, 2016 at 10:09 AM with the headline "Private equity firm buying SciQuest for $509M."