Quick Pitch: TaskUs (TASK)

Expected Improved Offer

This one ran away a bit over the last few days till I finalized the research. However, I think the risk/reward is still attractive at the current levels.

TaskUs, a successfully growing BPO business, is getting privatized at a low-balled price by Blackstone and two founders. Together, the buyer group has 82% economic interest and 97% of the voting power, however, the transaction will still need to be approved by the majority of disinterested shareholders. The current offer stands at $16.50/share, while the stock is at $18, so the market is already factoring in a high chance of an improved bid. Two activists (one of which controls 25% of minority votes) are opposing the offer, ISS is also recommending to vote against it.

I believe there is a good chance the buyer group will raise its offer before the September 10 shareholder vote. This is an almost standard practice for the buyouts by controlling shareholders – low-ball offer first and an improved bid later. So even before signing the current agreement, the buyer group might have already contemplated that an improved offer would be needed to get this over the finish line. The bigger question is by how much.

I do not think investors are risking much to wait and see, as the downside seems to be well protected. The offer came at a modest 15% premium to pre-announcement levels and was announced before/simultaneously with a very positive Q1 earnings release. ISS also highlighted this in its assessment of the transaction, noting that the $16.50/share offer “may have represented a premium at announcement, but it appears that the unaffected price is not the most appropriate reference point for value at this stage.”

The entire sale process was flawed. From the start, the buyer group made it clear to the advisors that they would not consider alternative transactions with third parties, while the founders stated they were only interested in working with Blackstone to finance the deal. Here is a quote from proxy:

Blackstone stated that it would not consider potential alternative opportunities involving a sale of Company securities by Blackstone to a third party or entertaining bids for assets held by the Company. In addition, Mr. Maddock stated that he and Mr. Weir were only interested in working with Blackstone and were not open to working with an alternative financial sponsor.

The agreement was announced just hours before the strong Q1 results, which beat both guidance and street expectations. Later, Q2 results in August confirmed a meaningful growth inflection across all the segments. Notably, management already knew by April 22 that Q1 would exceed expectations, as disclosed to Evercore (the deal adviser). That same day, the buyer group told Evercore it wanted to announce the transaction by May 8, aligned with the earnings release, pushing to finalize the deal before the market could absorb the positive news. Advisors even raised this concern with the special committee, which then disregarded it, stating that the approach was still appropriate given the market volatility at the time.

Representatives of Evercore described a meeting they had with Company management to review the preliminary first quarter 2025 financial results, and representatives of Evercore and the Special Committee discussed, among other things, (i) that the preliminary first quarter results did not change the Special Committee’s perspective on the value of the Company or the Special Committee’s view that a transaction at $16.50 per share of Company Class A Common Stock was in the best interests of the Company’s minority stockholders and (ii) the pros and cons of announcing a deal before earnings results were released, with the Special Committee determining it was still appropriate to potentially announce the Potential Transaction prior to the earnings date, particularly in light of recent volatility in the market

Moreover, after the transaction was announced and activists raised concerns, the company attempted to pressure shareholders into supporting the buyout. Management claimed that, absent the offer, the stock would trade 20% below unaffected levels, while in the same statement, it noted that peers had declined 10%. Such comparison is flawed as the selected peer group had very different growth dynamics, margin base and leverage profiles. As one of the activists put it: “The public comparables and precedent transactions used to defend the proposed valuation reflect an unrepresentative universe of companies from both qualitative and fundamental perspectives”.

In the same release, the company claimed that two of its segments, Digital Customer Experience (DCX) and Trust & Safety, which together contribute 86% of total revenue, are at significant risk of AI disruption. Yet before negotiations began in March, the founders had unequivocally stated that their ‘premium workflow focus’ in the DCX segment actually benefits from the AI disruption. The subsequent Q1/Q2 results only confirmed that. Same story with Trust & Safety business, which has, in fact, been the only segment growing consistently over the last 5 years despite the market turmoil.

There seems to be plenty of scope for a higher bid. It was well put by Murchison, one of the activists:

This year alone, the Company is projected to generate between $75 million to $120 million of free cash flow. According to the Proxy Statement, TaskUs will also utilize $100 million to $200 million of its own cash to partially fund the Transaction, meaning that the Buyer Group will recoup most of its “equity check” using free cash flow and be made whole in under a year, while the rest of the Company’s stockholders give up their shares at what we believe to be a depressed valuation. In other words, the sum of the cash on hand as of June 30, 2025 and the FY2025 Adjusted Free Cash Flow guidance provided by the Company on February 26, 2025 is likely to exceed the cost of acquiring the outstanding shares not currently owned by the Buyer Group at the proposed acquisition price of $16.50 per share.

If the offer is raised to a more reasonable $20/share, the buyer group would need to contribute only additional $60m to cash out all of the minority shareholders, or just 4% of the current market cap. I think this is low enough bar to get this transaction over the finish line, especially as majority of the investment will be recouped right away from existing cash and FCF.

Valuation support for an improved offer also seems reasonable.

TIXT, a close peer of TASK, is also getting privatized by its majority owner. The latest bid (which was already increased from the initial one) values TIXT at 6.5x 2025E EBITDA, the same multiple implied by the buyer group’s current bid for TASK. Yet, on every key metric TASK is the stronger business with faster growth (22% vs. 5% YTD) and significantly lower leverage (0.3x vs. 3.5x).

Here are few thoughts from Murchinson and Think Investments on TASK’s valuation:

Murchinson:
In closing, TaskUs is not a distressed business and should therefore not be selling itself at a discount to its base case valuation. The Company is on track to significantly exceed its FY2025 Adjusted EBITDA guidance. As such, selling a company with TaskUs’ operational performance, cash flow and growth trajectory for less than 7.0x EV/2025E EBITDA, which is well below the Company’s three-year trading average of ~8.0x, is unacceptable. By contrast, assuming an 8.0x base case multiple on FY2025E Adjusted EBITDA, the takeout price should be a minimum of ~$19.00 per share, reflecting the Company’s true fair value before any control premium is even added to the purchase price.

Think Investments:
We view the recent acquisition announcement of WNS by Capgemini as the most relevant precedent transaction – this pending transaction implies a ~12x EV/LTM EBITDA multiple vs. the fairness opinion’s 6.8x precedent transaction median; WNS was omitted from the Company’s valuation materials.
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Think’s independent precedent transactions and public comparables, informed by our long-term coverage of the space, suggest a fair EV/2026E adj. EBITDA multiple range of 8-12x.

Putting this together, I believe an improved offer at 8x 2025E EBITDA or around $20/share would be a reasonable outcome for all parties. This also falls within the range of the two activists’ expected fair value for of the company, between $19-$25/share.

Business Overview

TaskUs is a fast-growing business process outsourcing (BPO). Unlike traditional BPOs, TaskUs concentrates on premium services that are less vulnerable to automation and increasingly critical to leading technology platforms. The company calls these ‘premium workflows’: e.g. dealing with most profitable customers of a particular client, where the call needs to be answered by a real person right away and cannot be replaced by AI agent. For more details how TASK is different from other BPO providers and why it is less likely to be replaced by AI agents, I recommend reading through this VIC pitch from Mar’25.

Since 2019, the company has delivered a 23% revenue CAGR while serving major customers including Meta, Uber, and TikTok.

It operates across three core segments:

• Digital Customer Experience (DCX): TaskUs provides customer support for leading digital platforms, but with a focus on premium workflows rather than commoditized call-center tasks. Clients increasingly reinvest savings from automating low-end support into “white glove” service for their highest-value users, where TaskUs specializes. This focus has driven a reacceleration in growth, with DCX up 11% YTD in 2025 despite AI-related headwinds across the broader BPO sector.
• Trust & Safety: This segment covers content moderation, compliance, and risk management, areas central to the operations of major social platforms and regulators. TaskUs reviews sensitive and regulated content across violence, child safety, advertising compliance, and financial services (KYC/AML). Trust & Safety has grown every year since 2019, accelerating to 30% growth in 2024, and remains structurally resilient to AI disruption given the complexity and liability involved.
• AI Services: TaskUs supports the development and deployment of next-generation AI systems through data labeling, red-teaming, and model feedback. The company also partners with autonomous driving companies and leading AI labs. Revenue from AI Services accelerated 66% in the first half of 2025, directly benefiting from the surge in global AI investment.

Together, Trust & Safety and AI Services now make up nearly half of TaskUs revenue, both with long growth runways and minimal exposure to automation risk. Meanwhile, DCX continues to prove resilient by concentrating on premium workflows that require expertise and human judgment, positioning TaskUs well relative to generic BPO peers.