Zendesk punished by investors after vowing to remain independent

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The Zendesk ownership saga took several new turns this week, with an external investor, a review of its strategic options coming to a close, and the company deciding to stay independent.

Zendesk has made more noise recently than you would expect from a company of its size. After announcing that it would buy Momentive for more than $4 billion, Zendesk has been in a fight with external investors that has become a recurring headline.

The SurveyMonkey deal was thought to be a way to drive revenue growth and push the company from purely help desk related tasks to a smaller degree of customer relationship management. It was suggested in an investor presentation that the deal could help it grow revenue from around $1.39 billion, the run rate it was at in November 2021, to $3.5 billion by 2024.

The conversation between the company and its shareholder has become more strained as time has gone on. The company ignored the demands outlined in letters to the company and in statements. This week, there was a threat of a lawsuit if a stockholder meeting wasn't called immediately.

The person wants to sell the company. We wrote at the time that the $17 billion offer to sell the company was a cause for concern. It's easy to see why founder and CEO of Zendesk, Mikkel Svane, didn't want to go that route. The deal was concluded to be worth more to the company than it was to it's shareholders.

It shouldn't be a surprise that the company ended up in a sale process. In the last couple of years, we have seen some big enterprise deals, including the recent announcement to buy VMware for $61 billion, which is still under a go shop provision and subject to regulatory scrutiny. Prior to that, there were some big software deals, such as Microsoft buying Nuance Communications for $19 billion, andOracle buying Cerner for the same price.

The deals happened in a different economy. Markets have retreated and VC dollars have become tighter. The valuations are down everywhere. It would make sense that now is not a good time for a sale of the company.

The company is in agreement. The company had a chance to take the money and run, but it thought it was worth more. Is the $17 billion offer that was rejected earlier this year more attractive now that the value of technology companies has fallen? It's enough to make the decision to decline questionable. Let us know what you think.