Software company Qualtrics to buy health-tech firm Press Ganey for $6.7bn
Deal is latest in busy stretch for private equity-backed software and healthcare-focused technology companies
Qualtrics, the customer service software company owned by private equity group Silver Lake, has struck a deal to buy healthcare-focused technology firm Press Ganey Forsta for $6.75bn including debt, according to people familiar with the matter.
The deal, which is set to be announced on Monday, will help to extend Qualtrics’ artificial intelligence technologies to healthcare clients as it attempts to apply AI to complex, highly regulated industries.
Qualtrics provides everything from automated chat widgets to tools that sift customer feedback to more than 20,000 companies and organisations globally, including Delta Air Lines and Hilton Worldwide.
Press Ganey, meanwhile, is used by over 41,000 hospital systems and healthcare companies to compile feedback from patients and doctors in manual, verbal and digital surveys.
The companies are betting that the combination of Qualtrics’ artificial intelligence technologies with Press Ganey’s reach in the healthcare industry will give rise to new AI-powered tools and services, said people familiar with the matter.
Industry experts have predicted that so-called “vertical” technology companies such as Press Ganey will become increasingly valuable as acquisition targets for AI platforms, given their access to sets of data to train learning algorithms.
Press Ganey’s combination with Qualtrics, a pioneer in applying AI to handle customer services like ordering food online, or rebooking flights and hotel stays, is also meant to bolster its technology offerings as large tech giants such as Palantir and Oracle expand into healthcare, said a person briefed on the matter.
Under the terms of the deal, Press Ganey’s owners — Ares Management and Los Angeles-based private equity group Leonard Green & Partners — will be paid in a combination of cash and privately held Qualtrics stock.
A consortium of 11 banks and private capital firms in total are providing the debt financing for the deal, the sources said.
The takeover is the latest acquisition in a busy stretch for private equity-backed software and health-tech deals, a bright spot in a market where many sponsors have been slow to exit investments for fear of poor returns.
The value private equity-backed software and health-tech deals globally was $571bn worldwide this year to the end of September, the third highest on record, according to data from the London Stock Exchange Group.
The deal, which values Press Ganey at an enterprise value of $6.75bn, marks Qualtrics’ biggest acquisition in its two-decade history. Silver Lake and Canada Pension Plan Investment Board teamed up in 2023 to take Qualtrics private in a $12.5bn buyout.
Qualtrics under chief executive Zig Serafin has turned profitable, generating over $500mn in free cash flow over the past 12 months, the people said.
Silver Lake — which last week agreed to take video games maker Electronic Arts private in the largest leveraged buyout of all time, valued at $55bn — is known as one of the leading private equity investors in technology companies.
It often uses its largest investments like Dell and entertainment company Endeavor as a beachhead for industry consolidation.