Entering text into the input field will update the search result below

Ultimate Software Group: A Great Success Story


  • Ultimate Software Group has been acquired in a huge $11 billion deal.
  • Unlike many SaaS players, this company has operated relatively under the radar and has combined solid growth with a >$1 billion revenue run rate and real profits.
  • The multiples look quite steep if you ask me, as I am congratulating all the long-term believers in Ultimate.
  • Looking for a community to discuss ideas with? Value In Corporate Events features a chat room of like-minded investors sharing investing ideas and strategies. Start your free trial today »

Ultimate Software Group (NASDAQ:ULTI) had a pleasant surprise for its investors, as it announced that it has reached a merger agreement with Hellman & Friedman under which the company is sold for $331.50 per share in cash, representing an $11 billion valuation!

The multiples look quite steep by all means, although Ultimate is a high-quality business. Therefore, congratulations to all the believers and holders of the shares, as the risk-reward for the new buyers does not look that compelling at these levels, at least to my eyes.

The Deal

Ultimate Software has reached a deal under which it will be sold to Hellman & Friedman at a price which matches the all-time high set in September of last year. This price action was, of course, followed by a fierce sell-off in technology-related names, including that of Ultimate, as shares fell to just $220 in December. Shares recovered to $275 per share in recent days and have jumped to the highs again following the news release of the deal.

Hellman is very much interested in the provider of human capital management solutions which operates in the cloud. It is not just Hellman which is interested in the company, as it has partnered with other large investors as well, including Blackstone, GIC, CPPIB and other names. The deal does not just create a wealth transfer to shareholders but to all employees as well, as they too hold shares in the company.

The deal marks an end to a great run which long-term investors in the firm have seen. Trading at just $10, even during the dotcom bubble, shares have gradually moved higher for a 30 times return in less than two decades, translating into very compelling returns by all means. To make an even better company and offer customers better service, Ultimate Software and management claim that being a

Please subscribe to Value In Corporate Events - Marketplace Checkout to obtain premium research on all the latest IPOs, M&A activity and other corporate events. Reviews of situations will be made upon request!

This article was written by

The Value Investor profile picture
The writer is a long term value investor and M.Sc graduate in Financial Markets with over 10 years experience. Value can be found in both long and short ideas and uses options to enhance the risk-return profile of investment ideas. Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (3)

05 Feb. 2019
Well written and so accurately reflective of a great culture built on foundation of teamwork starting with employees first, customers next and shareholders last.
As a long term buy and holder of ULTI I’m grateful and hope ULTI’s business and cultural success inspires others to stay the course.
The Value Investor profile picture
In general the sector is quite pricey if you ask me!
Any other Saas / software stocks that can be recommended now that this one is taken ?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.