What you need to know:

• Silver Lake, a minority shareholder at 4.2 per cent, along with Canada Pension Plan Investment Board (CPPIB) offered $12.4bn for all outstanding shares, a six  per cent premium to the most recent closing price.
• SAP bought Qualtrics in late 2018 for $US8bn and closed the deal in January 2019.
• Both current CEOs were their company's respective COOs at the time the deal was done.
• The German software giant struggled to integrate Qualtrics into its business with SAP insiders saying it was a poor cultural fit.
• Qualtrics was refloated as a public company in 2020, with SAP as the majority owner.
• It might now be privatised again.
• The relationship remains important to both companies with strong Qualtrics integrations in SAP's SuccessFactors and S4 Hanna.

Qualtrics has confirmed a bid to take the experience management business private again. The news came in an SEC filing overnight. If the offer is accepted it will rule a line under SAP's oddly profitable yet unsuccessful attempt to integrate the business into its operations which began a little over four years ago.

In a statement coincident to the filing, a Qualtrics spokesperson said: "Our exclusivity agreement with Silver Lake is a next step in the process announced by SAP on January 26th. As the process continues to play out, we’re committed to achieving the best outcome for our company and our shareholders, as we maintain our focus on delivering for our customers around the world.”

SAP first announced its intention to buy Qualtrics in November 2018 for $US8bn with the acquisition completed in January 2019. The initial acquisition may have gone well, but the integration did not, with a SAP executive telling Mi3 the culture clashes emerged almost immediately.

Per the SAP insider: "Being somewhat gun-shy from previous deals where it had been accused of being over-bearing, SAP never moved toward anything approaching an operational integration of Qualtrics, preferring to let them run at arms length."

"Despite this, even essential GTM (go to market) support was actively resisted by Qualtrics leadership and employees who seemed to resent the acquisition. Infamously, in the analyst community at least, then CEO Ryan Smith attended the company’s briefing day where he was presenting, but refused to use SAP’s corporate slide ware. Culturally and operationally, it just never worked, and the move to partially list in early 2021 didn’t surprise."

In a nod to Slide ware-gate, another observer of the process said "They fought over everything, even the little stuff."

By July 2020, the bonhomie of the original handshake was long gone and SAP announced it was taking the company public again with an IPO in the US.

SAP CEO Christian Klein pronounced the deal a great success, declared victory and then promptly headed for an exit. He was SAP's COO at the time of the acquisition.

In one sense he was right — SAP more than made its money back on the deal, although an alternative reading is that $8bn of the company's capital was tied up in an acquisition that was clearly a bad cultural fit, and months of executive leadership headspace and focus was wasted.

SAP's stake in the business currently stands at 71 per cent.

Separate but together

While ultimately the deal as conceived didn't stick, both sides walked away richer – literally – from the experience. Qualtrics got an accelerated entree into the SAP enterprise customer base, and richer integrations into the SAP product set, while SAP made a tidy return on the investment itself, and just as importantly from a long term perspective, accelerated the integration of experience data into its core products.

Qualtrics CEO Zig Serafin, who like Klein was the COO of his company when the deal was struck, stressed the importance of the ongoing relationship with SAP.

"The partnership has been very beneficial for both sides, and it's why we're going to continue to partner, " he told Mi3. "That's really important, in particular for our customers."

"In HR, the Success Factors offering has been transformed into being what they call human experience."

According to Serafin, this is due to the fact that Qualtrics plugs into SAP's solution in a way that helps to magnify the leading indicators that drive engagement performance, while also being factors that are mission critical to how a business operates.

Likewise SAP also uses Qualtrics within its S4 HANA offering, he said.

Mi3 also asked Serafin what Qualtrics learned from the four year experiment.

"We learned the culture really matters. I would say it's a reinforcement of the fact that culture makes every bit of a difference in the ability to innovate, to keep curiosity, to co-innovate with the people that you work with. That's what we learned."