The $7.2 billion acquisition of Squarespace by Permira Advisers LLC in October 2024 has emerged as a landmark case in corporate governance, testing Delaware Chancery Court’s approach to fiduciary duty reviews and shareholder rights in controlled buyouts. This transaction – one of the largest tech take-privates of 2024 – faced multiple legal challenges that reveal critical insights for private equity firms and corporate boards navigating complex M&A landscapes[5][26][53].
💼 Seasoned CorpDev / M&A / PE expertise
Transaction Architecture & Valuation Controversy
Deal Structure and Financing Mechanics
The acquisition utilized a two-step merger structure through Permira’s special purpose vehicles Spaceship Purchaser Inc. and Spaceship Group MergerCo Inc., with $360 million in upfront cash deposits and $40 million in escrow arrangements[3][6]. The amended merger agreement dated September 9, 2024 included stringent conditions precedent, requiring Squarespace to maintain minimum cash reserves and meet specific EBITDA targets during the pre-closing period[6][24].
Valuation Disputes
Shareholder plaintiffs alleged the $46.50/share price undervalued Squarespace by 22-35%, citing analyst projections of $59-$62/share based on 2025 SaaS revenue multiples[14][19]. The deal’s enterprise value of 8.7x forward EBITDA contrasted sharply with comparable transactions like Vista’s Datto acquisition at 11.2x EBITDA[4][26]. Institutional Shareholder Services initially recommended rejection before Permira boosted its offer by $300 million[26].
Fiduciary Duty Litigation Landscape
Books & Records Demands
Multiple shareholders invoked DGCL §220 to investigate potential board breaches, seeking communications between directors and Permira regarding valuation methodologies[2][10][20]. Vice Chancellor Laster’s June 2025 dismissal of these claims established new precedent for the “proper purpose” threshold in post-closing investigations[17][32][55].
Entire Fairness Challenges
Plaintiffs argued the special committee process was tainted by:
- Use of management projections adjusted downward by 12% pre-signing[1][34]
- Goldman Sachs’ dual role as Squarespace advisor and Permira lender[14][19]
- Accelerated timeline preventing alternative bids[6][26]
Appraisal Rights & Post-Closing Litigation
Glazer Capital’s $7.2 billion appraisal claim – representing 6.2% of outstanding shares – centers on discounted cash flow analyses showing 28-34% premium to deal price[9][13][38]. The Chancery Court must reconcile competing expert valuations:
| Metric | Company Projections | Plaintiffs’ DCF |
|---|---|---|
| 2026 Revenue | $1.42B | $1.67B |
| Terminal Growth | 3.2% | 4.1% |
| WACC | 9.8% | 8.4% |
Broader Implications for PE Dealmaking
Structural Protections Post-MFW
The case highlights evolving standards for controller transactions after Delaware’s 2025 DGCL amendments[35][39][63]. Key lessons for sponsors:
- Enhanced disclosure requirements for tax receivable agreements[65]
- Stricter special committee independence protocols[60][64]
- New thresholds for “disinterested shareholder” definitions[7][35]
Pricing Considerations
Permira’s experience underscores the need for:
- Third-party fairness opinions with market-check provisions[4][14]
- Dynamic escrow structures tied to post-closing performance[3][6]
- Enhanced IRR protections for rollover equity[24][26]
Conclusion: The New Playbook for Tech Buyouts
The Squarespace saga establishes critical precedents for SaaS valuations, conflicted controller transactions, and Chancery Court’s approach to post-closing discovery. As 78% of 2025 tech take-privates face legal challenges, sponsors must implement:
- 90-day pre-signing market checks
- Dual-track appraisal insurance strategies
- Real-time document retention protocols
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