Three Years After it Sold for $3.8 Billion, Utah-based Pluralsight is Being Bought by an Investor Group for "Pennies on the Dollar" and Recapitalized to the Tune of $200 Million

In the snow sports industry the term "out over your skis" refers to someone who unsuccessfully tries to ski beyond his or her ability, an effort that often results in spectacular crashes, injuries or both.

Although this idiomatic expression has its roots in downhill skiing, the truth is that this concept can be applied to almost any endeavor where someone or something attempts to accomplish that which is beyond their skillset(s) and/or ability.

So, what do skiing crashes and "getting out over one's skis" have to do with business in Utah?

In the case of one of the largest private equity firms in the world (Austin, Texas-based Vista Equity Partners), the answer is "A lot," especially in regards to its now failed 2021 "Take Private" acquisition of Draper, Utah-based Pluralsight for $3.8 billion.

Here's the rest of the story.

Pluralsight: From Classroom Training to Online Video Instruction and From Venture-backed Unicorn to IPO, PE Buyout, and Then/Now, A Valuation Collapse and a Fire Sale to New Owners

When four colleagues launched Pluralsight in 2004 in Farmington, Utah, the business model was fairly straightforward, if a bit onerous, travel-wise.

Specifically, a Pluralsight employee would provide on-site software training at a business event or venue, which generally meant going out on the road.

To hear former Pluralsight CEO, Aaron Skonnard explain it (1 of Pluralsight's 4 co-founders), the money was decent, but the business model was never going to allow the company to scale (aka, get super big, super fast).

So when the partners decided to try online, video-based training/instruction, revenue took off, expenses dropped, and prospective investors took notice — serious notice.

For example, as noted in Pluralsight's online history, that move to online, video-based training/instruction began in 2008, just four years after the company launch.

From there, the notable milestone's in Puralsight's history began to pile-up:

• 2012 (December): Ranked at No. 202 on the Deloitte Technology Fast 500;
• 2012 (December): Raised $27.5 million in a Series A round of funding;
• 2013 (July): Acquired PeepCode, its first of of eight acquisitions between 2008 and 2018;
• 2013 (August): Ranked at No. 692 in the Inc. 5000;
• 2014 (August): Raised $135 million in a Series B round of funding;
• 2015 (January): Named by Fortune as a "Unicorn" (a private, venture-backed firm valued at over $1.0 billion);
• 2016 (December): Raised $30 million in a Series C round of funding;
• 2018 (May): Became a publicly traded company following its successful Initial Public Offering as it raised $310 million in its IPO on the NASDAQ Stock Market.

Then, following the business discombobulation caused during Year One of the global COVID-19 pandemic (2021), Pluralsight, like many other hot SaaS-based tech companies, saw significant interest from potential acquirers.

Specifically, a number of private equity firms and corporate investors felt their insights and management skillsets could drive greater value for these firms should they own/control them.

Hence, after five months of public disclosure and back-and-forth discussions about the proper valuation of Pluralsight, Vista Equity Partners acquired Puralsight for $3.8 billion in a "Take Private" transaction, removing Plurasight from the roles of public companies in the process.

Now, to be clear, Vista Equity Partners, is not a schlock when it comes to the Private Equity world.

In fact, as its website says, it currently has "... over $100 billion in assets under management (AUM) and over 20 years of investing exclusively in enterprise software."

In other words, Texas-based Vista Equity Partners has definitely "earned its spurs" since its founding in 2000.

When Pluralsight was acquired/taken private in 2021, the $3.8 billion purchase price was the largest amount ever paid for a Utah-based technology company.

However, in business (as in sports), prior success does not guarantee future success.

And as shown in the brief GIF near the beginning of this writeup, skiers sometimes fall. Spectacularly.

The Investment Exuberance of 2021 and Some of the Consequences

As even the most casual reader will recall, the impact of the COVID-19 pandemic, plus the decisions made (and the policies enacted as a result), were clearly significant and far-reaching,

• From businesses shuttered to growing unemployment rolls, and
• From those sickened for sometimes months on end, and
• To, of course, over 1.8 million dead in 2020 alone (World Health Organization).

COVID-19 also impacted investment activities, both in 2020 and beyond.

For example, on the venture capital front, Statista reported that VC investments in the United States rose less than 10% in 2020 to $171.4 billion from $149.3 billion in 2019.

Yet a year later, Statista reported that U.S. based VC investments topped out at $345 billion in 2021, nearly 2X the prior year.

And in the U.S. private equity world, the delta between 2020 and 2021 saw similar growth.

Specifically, Pitchbook published in its US PE Breakdown (2021) report that while the value of

• PE acquisitions in the U.S. hit ~$670 billion in 2020,
• That total rose to an estimated $1.238 trillion in 2021, also near 2X growth.

It was as if there was a level of pent-up demand in 2021 to deploy capital that had been tamped-down during 2020 due to COVID-19 excesses.

Unfortunately, as now understood through through the numerous less-than-stellar results of such 2021 acquisitions across the entire private equity ecosystem (let alone outright failures), the Pluralsight PE purchase falls into that latter category (aka, a PE failure).

Specifically, in May of this year, Axios was one of several media companies to report that Vista Equity Partners had "written down" the entire $3.8 billion it had spent to acquire Pluralsight in April 2021.

In other words, Vista Equity Partners was declaring to the world that its Pluralsight purchase was a bust.

Fast forward to late August 2024 when Pluralsight officially announced it had agreed to be acquired for an unknown amount by a "... group of existing lenders led by funds managed by Blue Owl Capital and including funds managed by Ares Management, Goldman Sachs Asset Management, and by Oaktree Capital Management, among others."

According to a report by Bloomberg, the lender group would inject "... ~$275 million of new money into Pluralsight in the form of loan facilities," a restructuring that would eliminate ~$1.2 billion in debt currently on the Pluralsight books.

As noted in the Pluralsight news release, this new "... Investor Group will own 100% of the company ... (and will) provide over $200 million of capital to accelerate growth initiatives and support long-term strategic goals (at Pluralsight)."

Now ... is this new acquisition of Pluralsight finished, with its significantly realigned valuation in place?

Apparently not.

At least none of the members of the "Investor Group" have currently published any news announcements about the closing of said deal or begun listing Pluralsight as a portfolio company on their respective websites.

Nevertheless, all indications are that this is essentially a done deal and that Pluralsight is being (has been) acquired, this time at a fraction of the $3.8 billion price tag from April 2021.

Under the direction of the new Investor Group, expect Pluralsight to find ways to reduce costs, consolidate its product/service offerings, and boost revenue.

Can Pluralsight be successful in these endeavors, under new ownership?

Clearly, it's too early to tell.

But for now, Draper, Utah-based Pluralsight has apparently survived.

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