This article first appeared in Term Sheet, Fortune's newsletter about deals and dealmakers. Subscribe here.
AppDynamics, an enterprise software company based in San Francisco, was supposed to go public this morning. The IPO was highly anticipated, thanks to its status as a unicorn (a startup worth more than $1 billion) and pent up investor demand after a slow 2016 for IPOs. The AppDynamics IPO road show, where companies pitch their shares to institutional investors, had been well-received, with the company increasing its proposed share price range this week.
But while AppDynamics was putting the finishing touches on its road show pitch decks, Nadir Shaikh, an M&A banker at Qatalyst Group, had been discussing an acquisition with potential buyers. AppDynamics had not retained Qatalyst, according to a person familiar with the deal. This was not a dual-track process, where a company prepares to go public while also shopping itself to buyers. (TechCrunch first reported Qatalyst's involvement in the deal last night.)
But Qatalyst doesn’t underwrite IPOs, so drumming up interest from a buyer -- in this case, Cisco -- is one way to turn someone else’s IPO deal into a Qatalyst M&A deal. In other words, the firm lived up to its name. It was the catalyst for the deal.
A few notes:
Timing: The deal came together in about 72 hours. Cisco decided late last week to aggressively go after the company. The AppDynamics team didn’t think there was enough time, but after “maddening negotiations,” according to one person familiar with the deal, it came together.
Documents were signed Tuesday afternoon. That means CEO David Wadhwani was pitching the stock to road show investors as late as Tuesday morning, just hours before selling the company. Whoops, nevermind!
Pricing: The 11th hour timing gave AppDynamics a lot of negotiating power. If Cisco had approached the company a few months earlier, it likely could have gotten it at a much lower price. But because AppDynamics had nothing to lose if the deal didn’t happen, it could negotiate a cash deal with no escrows or onerous terms. “They had to buy it like it was a public company,” one source says.
Rob Salvagno, Cisco’s head of M&A, told Fortune's Jonathan Vanian, “Timing is always something that you can debate.”
Whiplash: The vote to sell was unanimous, but some board members took a little convincing. I’m guessing Wadhwani had some whiplash -- he joined the company a year and a half ago, with founder Jyoti Bansal becoming chairman. The plan was for Wadhwani to build out the management team, streamline operations, and take it public.
Returns: This is a very good outcome for AppDynamics’ investors, who poured $314 million into the company over nine years. The company’s last private valuation was $1.9 billion.
Greylock and Lightspeed co-led the Series A and Series B rounds. Greylock made around 25x its money, according to people familiar with the deal. Greylock says the deal more than returned its entire twelfth fund, a $500 million vehicle that closed in 2005.
Kleiner Perkins Caufield & Byers, which led the Series C, made more than 10x. Later investors include IVP, Battery Ventures, Sands Capital Ventures, ClearBridge Investments, Altimeter Capital, Adage Capital and General Atlantic. The latter three were planning to invest in a private placement alongside the IPO.
What does AppDynamics do, you ask? According to its now-irrelevant S-1, the company operates an “innovative, enterprise-grade application intelligence software platform that is uniquely positioned to enable enterprises to accelerate their digital transformations by actively monitoring, analyzing and optimizing complex application environments at scale.” According to its extremely relevant press release, the company “helps many of the world’s largest enterprises translate this data into business insights and empowers them to drive value for their customers in today’s digital world.”
For more on the deal, read Fortune's analysis here.
Update: This article has been updated to note TechCrunch's reporting on the deal.
Correction: Greylock return multiple was not 100x, as previously noted. The firm invested $23 million and expects $590 million in the sale, giving it a return multiple closer to 25x. Apologies for the error.