Private Equity and Private Credit Compete for DocuSign Acquisition

Competition is heating up over the potential buyout of DocuSign—both among private equity suitors and their debt financing sources. Now trading at a market value of $12.8 billion, any deal for the provider of online signature solutions would be one of the largest buyouts of 2024 thus far.

Per Reuters, Bain Capital and Hellman & Friedman are each in the final round of bidding for the company, which had launched a sale process in December. Blackstone was also said to have been involved in early talks, though is no longer in contention.

Lining up the Debt

Competitive pressures for this deal may be more intense for the lender process than the actual sale process. It’s the same story as most significant buyouts over the last 12 months: direct lenders want to continue taking share, while traditional banks are working hard to ensure their syndicated offerings stay relevant.

Should direct lenders win out, this would be the largest such deal by a margin of nearly $3 billion. It may be a more difficult win this time around, however. After what’s been a prolonged period of comparative market favorability for private credit, conditions may be opening up an opportunity for banks.

Syndicated loan and junk bond markets are more robust now than in months past, and banks are in a better position to line up a favorable package for Bain or H&F—providing lower borrowing costs and more attractive documentation.

Although, even if banks do lose out this time, they’re staying busy with overtures to sponsors who completed private credit-financed deals in 2022 and early 2023. After making it through the first 12 months of the term, lower prepayment penalties now open up the possibility of refinancing with cheaper syndicated debt (which wasn’t an option from the start for many of those deals, completed when credit markets had seized up).

The Future of DocuSign

DocuSign went public in 2018 at around a $6 billion valuation. After hitting pandemic-era highs, the business has steadily retrenched since 2021—partly a function of broader market turbulence, but more likely a response to what has now been ten consecutive quarters of decelerating growth.

Management’s longer-term goal is to move the business beyond its e-signature roots to become a broader document services cloud platform. That kind of change may be challenging to execute as a public company, but could set the stage for a strong private equity-backed inorganic growth story.

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on direct buyouts, as well as an earlier strategic advisory stint.