TeamViewer attracted take-private interest last year amid PE boom

Several buyout groups engaged investment banks at the end of 2021 to sound out the viability of launching an offer for the German remote access control provider, according to the sources. Some advisers were also involved in pitching a leveraged buyout of TeamViewer to other private equity firms that turned down the opportunity before Christmas, one of them added.

The Frankfurt flotation of TeamViewer in 2019 – the biggest that year – delivered a bonanza for its private equity backer Permira. The London-headquartered sponsor sold a 42% stake for proceeds of EUR 2.21bn, valuing TeamViewer at EUR 5.25bn. Permira acquired the company from GFI Software for EUR 870m in 2014.

As Permira has made no indication it would be willing to sell down part of its current 20% holding, one of the sources said prospective buyers could be required to offer a "huge" premium to convince shareholders to tender their shares. He said a successful offer would likely need to be priced north of TeamViewer's all-time share price high of EUR 51.48 each, meaning a deal potentially worth in excess of EUR 7bn.

The company, based in Goppingen, Germany, listed at an EV/sales of 23x, roughly in line with key listed peers ServiceNow and Atlassian at the time. The stock closed on Thursday at EUR 14.38 – some 45% below its IPO price – for an EV/sales valuation of 6.4x forecast 2021 revenue, according to data provided by Fidessa and compiled by FactSet. ServiceNow currently trades at 22.6x forecast 2021 revenue, while Atlassian is valued at 19.4x forecast revenue for the financial year ending June 2022.

TeamViewer's share price would need more time to evolve to see if current trading levels are sustained before any approaches would be taken seriously, one of the sources said. "There's no way shareholders would accept an offer and see value given that underperformance is recent," they added.

One of the sources suggested that part of the reason behind the company's share price decline stemmed from shareholder dissatisfaction with the decision to enter into a five-year sponsor partnership with Premier League football club Manchester United, reported to be worth roughly GBP 47m (EUR 56.4m) per year. However, another source said TeamViewer has faced wider market headwinds that have contributed to the share price pressure.

While pandemic-induced demand for remote connectivity software sent the company's valuation to highs of around EUR 10bn in 2020, its share price has tumbled in recent months after cuts to sales and profit guidance in October 2021. Management cited a decrease in expected contract renewals as a reason for scaled-back medium-term financial goals and guidance, warning various headwinds were likely to be "persistent rather than temporary".

Permira, which was among investors to sell shares in the successful IPOs of e-commerce platform Allegro and bootmaker Dr Martens, has been consistently selling down its stake in TeamViewer since the listing in 2019. In May 2020, it sold a 12.5% stake to institutional investors at EUR 41 apiece to raise approximately EUR 1bn. Between the listing and February 2021, Permira has sold roughly EUR 5.5bn's worth of TeamViewer shares, according to reports.

News of interest in TeamViewer comes amid a wider raid on European public companies by cash-rich private equity firms in the past year. Over the last year, the market has seen several large-cap private equity firms willing to take companies of TeamViewer's size private, a banker following the situation said, citing Zooplus and Schaltbau as examples. TeamViewer is still a highly profitable business, and taking the business private would make sense for PE funds given its value potential, the banker added.

Three financial-sponsor-led buyouts of listed companies were completed during 2021 in Germany alone, with Hellman & Friedman and EQT's joint EUR 3.4bn acquisition of pet retailer Zooplus the fifth largest European take-private of the year, according to Dealogic data. Including Carlyle's EUR 543m purchase of railway components producer Schaltbau and Morgan Stanley Infrastructure's EUR 2bn deal for cable provider Tele Columbus, the three deals were completed at premiums ranging from 13.2% to 73%.

Representatives for TeamViewer and Permira declined to comment.

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