New Relic agrees to $6.5 billion buyout amidst job cuts
2023 has seen a series of significant layoffs, leaving thousands of workers unemployed across various companies, including tech giants like Google, Amazon, Microsoft, Yahoo, Meta, and Zoom. Startups have also not been spared from this wave of job reductions, impacting sectors ranging from cryptocurrency to enterprise SaaS.
Among these companies, New Relic, a 15-year-old software firm headquartered in downtown San Francisco, has been grappling with its own set of challenges, facing not only layoffs but also financial losses.
New Relic announces $6.5 billion buyout and layoffs
Amidst the layoffs, New Relic has made headlines with a massive $6.5 billion buyout agreement. The deal, orchestrated by two local private equity firms, Francisco Partners and TPG, comes just over a month after the company announced a significant workforce reduction of more than 200 employees.
This move follows New Relic's quarterly financial results, which showed increased revenue but a loss of over $33 million from April to June.
Major players in tech investment are on the case
The private equity firms involved in the buyout, Francisco Partners and TPG, are both based in San Francisco and have extensive experience in the tech sector.
Although New Relic is not currently profitable, its consistent growth, combined with the recent job cuts, might have appealed to the investment giants. The buyout is expected to be finalized later this year or early next year and would see New Relic shareholders receiving $87 per share.
Notably, the company's founder, Lew Cirne, still holds 10% ownership of the firm, and under the buyout deal, he will roll over 40% of his shares into the private firm.
New Relic exits the public market
The acquisition will take New Relic off the public markets and make it a private company. However, the company has a 45-day window to explore other offers before the deal is finalized. Despite the ownership change, CEO Bill Staples assures customers that the company's strategy, identity, and business operations will remain unchanged.
The term layoff is a norm in the business world following the pandemic
New Relic's layoffs are just a part of a much broader trend in the tech industry. Layoffs in the tech sector have already surpassed the total number of tech job cuts in the previous year, with a running total of 201,860 layoffs recorded to date in 2023.
Several major companies, including Microsoft, have announced additional job cuts this year, citing the macroeconomic environment and the need to achieve profitability as the driving forces behind these workforce reductions.Advertisement