Smartsheet Acquisition Faces Legal Scrutiny Over Alleged Disclosure Issues

A significant legal challenge has emerged following the acquisition of work management software provider Smartsheet by a private equity consortium. Law firm Rosen Law Firm is investigating the completed sale, alleging that the company's board issued misleading information in official documents, potentially depressing the final sale price for shareholders.

The investigation focuses on the Proxy Statement presented to shareholders for approval of the transaction, which was finalized in January 2025. The consortium, comprised of Blackstone, Vista Equity Partners, and Platinum Falcon, acquired Smartsheet at a set price of $56.47 per share. The class action lawsuit alleges violations of the Securities Exchange Act, claiming company leadership deliberately presented quarterly results in an unfavorable light and utilized a "fabricated financial metric" to justify the sale price to the buying group. This suggests the possibility that Smartsheet was sold below its fair value.

Former shareholders now face a critical deadline to join the suit as lead plaintiffs: February 9, 2026.

Should investors sell immediately? Or is it worth buying Smartsheet?

A Broader Context of Tech Sector Volatility

This legal development occurs against a backdrop of heightened sensitivity regarding valuations in the software sector. Although Smartsheet is no longer publicly traded, recent market turbulence underscores the high stakes involved. For instance, Oracle shares experienced a drop of over 11% following disappointing quarterly results, highlighting the intense scrutiny on tech company performance and disclosure.

While shareholder lawsuits following acquisitions are not uncommon, the specific accusation of manipulating financial metrics to lower a company's valuation adds a layer of complexity to this case.

Potential Outcomes and Next Steps

The resolution of this litigation could potentially result in a settlement payment to shareholders who held equity at the time of the sale. The legal process will now enter a phase focused on gathering evidence to validate the claims of intentional deception. Affected investors are advised to review their legal options prior to the February 2026 cutoff date.