Cloud computing is the wave of the future, and there's been a big trend toward consolidation in the cloud space as companies jockey for position in the rapidly expanding area. For Ultimate Software Group (ULTI), the human-resources niche has been highly successful for the company and its shareholders, and the customer loyalty it built over time spoke to the impressive quality of its platform.

Ultimate Software investors came into this week thinking that the company wouldn't report its 2018 results until Tuesday. But on Monday, the company gave them a big surprise: Not only were the company's finances stronger than ever, but Ultimate had accepted a bid to go private, and shareholders should see a big cash payoff for their stock if the deal goes through as planned.

Piles of $20, $50, and $100 bills

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Ultimate Software's last results as a public company?

Ultimate Software's fourth-quarter results showed how steady the company's growth has been. Total revenue of $304.8 million for the quarter was higher by 21% from the fourth quarter of 2017, keeping fairly steady compared to recent quarters. Adjusted net income of $62.4 million soared from the $34.2 million figure a year ago, and that produced adjusted earnings of $1.95 per share, crushing the $1.44 per share consensus forecast among investors.

Good trends continued for Ultimate Software. Recurring revenue for the quarter was up 24% to $266.4 million, making up an increasingly large portion of the company's overall sales. At the same time, retention remained extremely high, coming in at 96% over the past 12 months.

Reflecting on the year, the acquisition of PeopleDoc proved to be instrumental in driving success for Ultimate. The pioneering company in cloud-based delivery of human-resources services helped to broaden Ultimate's geographical scope, adding offices in England, France, Germany, and the U.S. markets. Moreover, the PeopleDoc platform gave Ultimate a stronger toolbox to offer to its clients, including online employee-help centers, case management, and employee file management.

Ultimate kept winning accolades for its accomplishments. On the workplace front, Fortune and the Great Place to Work Institute both recognized the company as a high-ranking employer. Ultimate also got recognition for its customer-service department, its artificial intelligence platform, and its leadership in building functional products with the flexibility to handle a wide range of demands.

CEO Scott Scherr celebrated the year. "Our customer base has grown to more than 5,600 organizations," Scherr said, "and the number of people records in our Ultimate cloud has expanded to more than 48 million." The CEO says that Ultimate remains focused on reaching its new goal of $2 billion in total revenue by 2021.

Why shareholders won't get a chance at Ultimate success

Unfortunately, Ultimate's decision to allow private equity investor Hellman & Friedman to purchase it won't give current shareholders much more upside in the company. Under the terms of the deal, Hellman & Friedman will pay a total of about $11 billion, with investors to receive $331.50 per share in cash for their Ultimate Software stock. The amount is roughly 20% above where the shares traded prior to the announcement, and the company expects the deal to close in the second quarter of 2019, assuming that it can obtain the typically required approvals.

However, there's still room for a bit of drama. The terms of the acquisition also give Ultimate a 50-day shopping period that allows for other bidders to try to come in and make their own pitches for buying the company. If a higher bid came in, then Ultimate would have the right under the Hellman & Friedman deal to evaluate it and compare it to the original offer. At that point, a bidding war might ensue, depending on how much any interested parties wanted the company.

Ultimate Software's shareholders were obviously pleased with the premium offer, and the stock actually moved above the $331.50 deal price, suggesting at least a modest expectation that a competing bid might come in. For those who've enjoyed the long and profitable ride in owning Ultimate shares, the acquisition will be bittersweet -- but it'll also be interesting to see what Ultimate is able to achieve as a privately held company.

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