The bell was never rung. Instead of updating investors on its projected market valuation, AppDynamics was the subject of a different announcement: It had agreed to be acquired by Cisco Systems Inc. for $3.7 billion.

Less than a day before AppDynamics Inc. was set to price its shares Wednesday, a group of employees and investors flew to New York City to attend the traditional bell-ringing ceremony for new listings at the Nasdaq stock exchange, according to a person familiar with the details. Technology executives, investors, and financiers were closely watching the deal, considered a crucial bellwether among so-called unicorns headed for public markets.

NEW YORK — It was supposed to be the first technology IPO of 2017.


The deal is seen by some advisers as the first in a long-expected wave of unicorn buyouts. With more than 150 companies valued at more than $1 billion and a temperamental IPO market, being acquired offers startups an exit from the funding rollercoaster and can also shield them from the regulatory and investor scrutiny that comes with a public listing. At the same time, it can create the risk that the startup loses its culture, independence and key staffers when folded into a larger business.

While dual-track processes — when a company pursues both an IPO and gauges buyer interest — are common, people with knowledge of the industry say AppDynamics’ 11th-hour deal is the closest to listing day that they’ve seen a tech company get before selling instead.

A representative for Cisco declined to comment on the details of the deal, while representatives for AppDynamics referred requests for comment to Cisco.

Bankers working on AppDynamics’ initial public offering were kept in the dark until moments before the official release, people familiar with the matter said, asking not to be identified as the details aren’t public. The roadshow for the IPO had been going well, and underwriters even thought that investors wanted more shares.


They had already decided to increase the marketed price range to $12 to $14 per share from $10 to $12 apiece, which would give the company a market value of about $1.72 billion at the top of the range.

But behind the scenes, the company had tapped boutique advisory firm Qatalyst Partners to run a sale. AppDynamics deliberately chose an adviser with no links to its IPO underwriters to avoid any information about the potential deal leaking, the people said.

A representative for Qatalyst didn’t immediately respond to a request for comment.

Had the company pushed ahead with an IPO, it was expected to be cash-flow positive soon after listing, AppDynamics chief executive David Wadhwani said Wednesday. “The reception was very strong,” he said on a joint conference call with Cisco executives. “We were feeling very good.”

Meetings with Cisco and its advisers took place late at night in hotel rooms during the IPO roadshow, and only after underwriters and investors had gone home, the people familiar with the matter said.

AppDynamics shareholders were initially opposed to a sale, but when Cisco began raising the offer price last week most changed their minds, one of the people familiar with the matter said. The final price of $3.7 billion provided about a 20 percent premium to where investors anticipated the stock would reach in its early days on the market, the person said.