DocuSign Inc (DOCU)

[eastunder]

Activist Investors Are Acting Up
https://finance.yahoo.com/m/29674f15-a255-31d0-82ba-71da70acb08b/activist-investors-are-acting.html

Dylan Lewis: Before we go to break, we've got one more story of corporate intrigue. Shares of DocuSign up 10% after a report that the E Signature company has bids to take it private. Emily, it has been a tough two years to be a DocuSign shareholder. I know because it's sitting in my portfolio, I am a [laughs] shareholder and I know exactly what those declines feel like. It seems like the story for this business has shifted pretty dramatically from being a growth story to being a more of a cash flow story and a profitability story. Is that why we're starting to see some interest in maybe taking it private.

Emily Flippen: I think there's a couple of things that DocuSign shareholders can take from this. The first one being that we don't know. These are still rumors, so we don't know what the price of any potential deal could be. But the fact that the stock is up on this news says to the market, hey, we assume the price is going to be higher than we're DocuSign is trading now. So as you mentioned, if you're a DocuSign shareholder, hopefully you know this is a business that has consistently produced a fair amount of cash. So it's not like Twilio in the sense that it has not been burning hundreds of millions of dollars and is trying to keep itself afloat. But you're right that the growth story has changed and that's not necessarily what every investor signed up for when they bought shares of DocuSign, which have declined pretty substantially from its pandemic peaks. But the other thing you take from this is the fact that there are two private equity firms reportedly fighting over DocuSign, which is really interesting because if you actually look at private equity activity over the course of 2023, it was pretty low in comparison to what it has been in the past. As you can assume, largely result of rising interest rates, higher inflation, more concerned about the economy. But now, people are saying, hey, look, we're having this soft landing. This thing nobody thought possible. Maybe it's happening right now, maybe interest rates to Ron's earlier point, maybe they'll come down at some point over the course of the year. I don't know if I agree with that, but I do think it's telling that there's a ton of private equity cash sitting on the sidelines. It's actually up pretty substantially in comparison to where it was even back in 2018. So there's a lot of money to be had for private equity firms that are looking to make a buck and with a business like Docusign, which does produce a fair amount of cash flow, has a lot of room for improvement. It makes sense that there'd be two companies fighting over it.