DocuSign Inc., renowned for its electronic signature software, experienced a significant boost in its stock value following reports from the Wall Street Journal suggesting the company’s contemplation of a potential sale. Sources familiar with the matter revealed that DocuSign is currently in preliminary talks with advisors, exploring the possibility of a leveraged buyout. As of Friday, the company’s market value stood at $12.8 billion.
In response to the speculations, a company spokesperson stated, “As a matter of policy, DocuSign does not comment on market rumors or speculation.”
Once hailed as a “pandemic darling” due to increased demand for digital document handling during the remote work surge in 2020, DocuSign experienced a notable uptick in sales and share prices. However, recent trends show a slowdown in revenue growth, with concerns raised by analysts like Anurag Rana from Bloomberg Intelligence, who noted that economic growth in 2024 could impede significant improvement.
Facing heightened competition from Adobe Inc.’s document business and a decline in investor interest in unprofitable software stocks, DocuSign has grappled with challenges. The company, which went public in 2018, underwent leadership changes with the appointment of Allan Thygesen, a former Google executive, as the CEO in 2022. Despite these efforts, the company reportedly underwent at least two rounds of job cuts in the same year.
Mark R Murphy, an analyst at JPMorgan, pointed out the difficulty DocuSign may encounter in finding a sustainable growth trajectory in the post-pandemic era, coupled with leadership changes and a restructuring of its sales organization.
In response to the news of a potential sale, DocuSign’s shares surged by as much as 15%, reaching $64.76, marking the most substantial intraday increase since December 2022. Notably, the San Francisco-based company’s stock had remained relatively unchanged throughout the year until Thursday’s close.
Analysts suggest that a private equity purchaser is the most likely scenario. While large software companies like Salesforce Inc. or Microsoft Corp. could be logical acquirers, they may be preoccupied with other priorities, according to Anurag Rana from Bloomberg Intelligence.
