Image source: SciQuest.

What: Shares of SciQuest (NASDAQ:SQI), a provider of cloud-based spending management solutions, soared on Tuesday following the announcement that the company was being acquired. At 11:45 a.m. ET, the stock was up about 34%.

So what: Affiliates of private equity firm Accel-KKR have agreed to pay $17.75 in cash for each share of SciQuest. That price is a 34% premium over the stock's closing price on May 27. The total equity value of the deal is roughly $509 million, and the transaction is expected to close during the third quarter of 2016.

The deal price is well below SciQuest's all-time high of around $30 per share reached in early 2014.

SQI Chart

SQI data by YCharts.

SciQuest CEO Stephen Wiehe pointed to the benefits of the deal: "This transaction provides SciQuest's stockholders with a significant premium over the pre-announcement market price and we believe it will allow us to increase our focus on long-term success that will benefit customers, employees, partners and suppliers. As a private company, we expect to continue to accelerate innovation, increase efficiency and expand our solution suite."

Now what: SciQuest's revenue growth ground to a halt in 2015, and while the company is profitable on a GAAP basis, those profits are minimal. The deal price will be a disappointment to investors who bought shares between early 2013 and early 2014, but those who bought at the recent lows should be thrilled. Accel-KKR is paying nearly 5 times sales for the company, suggesting that the acquirer is confident that SciQuest can return to growth as a private concern.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.