Why Olo's 65% Premium Deal Signals a SaaS Consolidation Wave – Here's What Investors Must Do Now

The acquisition of Olo Inc. by private equity giant Thoma Bravo for $2.0 billion—representing a 65% premium over its April 2025 share price—marks a watershed moment in the software-as-a-service (SaaS) sector. This deal isn't just a win for Olo shareholders; it's a clarion call for investors to reassess undervalued public SaaS stocks and brace for consolidation. With Thoma Bravo's track record of scaling SaaS platforms through strategic acquisitions and operational rigor, the Olo deal serves as a template for future M&A waves. Let's dissect the strategic value here—and what it means for your portfolio.

The 65% Premium: A Vote of Confidence in Undervalued SaaS

Olo's premium underscores a stark truth: public SaaS stocks are often undervalued relative to their private equity potential. At $10.25 per share—a 65% jump from its $6.20 pre-deal price—Thoma Bravo is betting on Olo's scalable network effects, which include 750+ restaurant brands, 88,000 locations, and 400+ integration partners. This isn't just a bid for growth; it's a signal that fragmented SaaS markets are ripe for consolidation.

Consider Thoma Bravo's prior successes. In 2022, the firm acquired Anaplan at a 46% premium, transforming it into a private growth engine. Since then, Anaplan has expanded its ecosystem through add-ons like Fluence Technologies, boosting its value beyond public-market constraints. Similarly, Olo's private ownership will allow Thoma Bravo to invest in untapped markets—such as enterprise-wide hospitality chains or global expansion—without the quarterly earnings pressure of public markets.

Why Olo's Network Effects Are a Model for Consolidation

Olo's strength lies in its network effects: its platform processes millions of daily transactions, creating data insights that benefit both restaurants and integration partners. This flywheel effect—where more restaurants join, attracting more partners, and vice versa—creates a defensible moat. Thoma Bravo aims to amplify this by:
- Expanding its API ecosystem to integrate AI-driven menu optimization and logistics tools.
- Targeting enterprise clients (e.g., Marriott hotels) to grow beyond quick-service restaurants.
- Monetizing transaction data to offer restaurants actionable insights on customer preferences and operational efficiency.

These moves mirror Thoma Bravo's playbook for SaaS consolidation: identify companies with sticky customer bases, then layer in acquisitions and R&D to scale their offerings. For investors, this means Olo's deal isn't an outlier—it's a blueprint for valuations in sectors like healthcare IT, edtech, or fintech, where fragmented players face similar consolidation pressures.

The Investment Case: Reassess Undervalued SaaS Stocks

The Olo deal should prompt investors to ask: Which public SaaS companies have similar network effects but trade at discounts to their private potential?

Start by screening for firms with:
1. High partner ecosystems (e.g., integrations with multiple third-party platforms).
2. Recurring revenue streams (subscription models with strong retention).
3. Untapped verticals (e.g., underpenetrated geographies or enterprise clients).

Thoma Bravo's focus on mid-market SaaS (via its $8.1 billion Discover Fund V) suggests smaller players with these traits could be next. Meanwhile, ETFs like the First Trust Cloud Computing ETF (SKYY) offer diversified exposure to the sector, capturing consolidation-driven upside without single-stock risk.

Risks and Mitigations

Critics may cite antitrust risks or integration challenges. However, Olo's <15% market share in restaurant tech limits regulatory hurdles, while Thoma Bravo's post-acquisition playbook—streamlining operations, boosting R&D, and leveraging cross-company synergies—has historically mitigated execution risks.

Final Take: Act Before the Wave Crashes

The Olo deal isn't just about one company—it's a harbinger of a consolidation boom. Public SaaS stocks trading at discounts to their strategic value are now prime targets. Investors should:
- Revalue holdings using Thoma Bravo's premium multiples.
- Look for “hidden” network effects in smaller players.
- Deploy ETFs like SKYY for broad exposure to consolidation trends.

In a sector where data and scale reign, the Olo acquisition isn't just a deal—it's a template for the next era of SaaS growth. Don't wait for the wave to crest.

The time to reassess—and act—is now.