Shares of EngageSmart to be Acquired for $23.00
Per Share in Cash
Represents a 30% Premium to the 30-Day
Unaffected Volume-Weighted Average Price (VWAP)
EngageSmart to Become Privately Held Company
Upon Completion of the Transaction; General Atlantic to Retain
Minority Ownership Position
EngageSmart, Inc. (NYSE: ESMT) (“EngageSmart” or “the Company”),
a leading provider of vertically tailored customer engagement
software and integrated payments solutions, today announced that it
has entered into a definitive agreement to be acquired by an
affiliate of Vista Equity Partners ("Vista"), a leading global
investment firm focused exclusively on enterprise software, data
and technology-enabled businesses, in an all-cash transaction
valued at approximately $4.0 billion.
Under the terms of the agreement, EngageSmart stockholders will
receive $23.00 per share in cash upon completion of the proposed
transaction. The purchase price represents a premium of
approximately 23% to the unaffected closing price of EngageSmart’s
common stock on October 4, 2023, and a premium of approximately 30%
over the volume weighted average price (VWAP) of EngageSmart’s
common stock for the 30 days ending October 4, 2023.1 Upon
completion of the transaction, affiliates of Vista will hold
approximately 65% and affiliates of General Atlantic, a leading
global investor, will hold approximately 35% of the outstanding
equity.
A special committee of EngageSmart’s Board of Directors
comprised of independent directors (the “Special Committee”),
advised by independent legal and financial advisors, was formed to
conduct a deliberate and thoughtful process to evaluate this
proposal and other potential value creation opportunities for
EngageSmart.
“We have built an amazing business by putting our customers at
the center of everything we do,” said Bob Bennett, EngageSmart CEO.
“We continue to see attractive growth and customer retention in our
vertically tailored SaaS solutions—a testament to the strength of
our business model and our leading products. We believe the
partnership with Vista and General Atlantic will enable us to
continue investing in innovation and people to drive growth. We
look forward to continuing to serve our customers and support our
employees who are relentless in their pursuit of customer
satisfaction.”
“EngageSmart is a demonstrated leader in delivering
mission-critical solutions for modern businesses and simplifying
customer and client engagement for over a hundred thousand
organizations,” said Michael Fosnaugh, Co-Head of Vista’s Flagship
Fund and Senior Managing Director. “We look forward to working with
EngageSmart as they continue to innovate, scale and empower
organizations to better serve their customers.”
“We have long admired EngageSmart’s vertical domain expertise in
SaaS and its high-quality solutions across the SMB and Enterprise
segments—proven by an established track record of growth and
profitability,” said Jeff Wilson, Managing Director at Vista. “We
are eager to build on EngageSmart’s momentum and look forward to
working closely with the talented leadership team to provide even
more powerful, innovative and seamless solutions for
customers.”
“We are grateful to Bob and the entire EngageSmart team for
their ongoing collaboration and trust. Since we first partnered
together in 2019, EngageSmart has established itself as an industry
leader by digitizing critical business processes and payments in
the industry verticals they serve,” said Paul Stamas, Managing
Director and Global Head of General Atlantic’s Financial Services
sector. “We believe this transaction is compelling for
stockholders, and we look forward to continued partnership with the
EngageSmart team alongside Vista to build on the Company’s success
to date.”
Transaction Details
Transaction negotiations were led by the Special Committee and
following its unanimous recommendation, the EngageSmart Board of
Directors unanimously approved the merger agreement with Vista and
agreed to recommend that EngageSmart stockholders vote to adopt the
merger agreement.
EngageSmart has entered into support agreements with affiliates
of General Atlantic and Summit Partners, owners of 52% and 14% of
the fully diluted stock of the Company, respectively, under which
they have agreed to vote all of their shares in favor of the
transaction, subject to certain terms.
The transaction is expected to close in the first quarter of
2024, subject to customary closing conditions and receipt of
customary regulatory approvals, as well as the affirmative vote of
the holders of a majority of the outstanding shares of the
Company’s common stock held by stockholders other than affiliates
of General Atlantic and certain officers of the Company. Vista
intends to finance the transaction with fully committed equity
financing that is not subject to a financing condition. Upon
completion of the transaction, EngageSmart will become a privately
held company and EngageSmart common stock will no longer be listed
on any public market.
The definitive agreement includes a 30-day "go-shop" period that
will expire at 11:59 PM ET on November 22, 2023, which permits the
Special Committee and its financial advisors to solicit and
consider alternative acquisition proposals. There can be no
assurance that this process will result in a superior proposal, and
the company does not intend to disclose developments with respect
to the "go-shop" process unless and until it determines such
disclosure is appropriate or is otherwise required.
Third Quarter 2023 Earnings
EngageSmart’s third quarter 2023 earnings will be issued on
November 2, 2023. In light of the proposed announced transaction,
EngageSmart will not host an earnings conference call.
EngageSmart’s third quarter 2023 earnings results will be available
on its investor relations website at
https://investors.engagesmart.com.
Advisors
Evercore is acting as financial advisor to the Special
Committee, and Skadden, Arps, Slate, Meagher & Flom LLP is
acting as legal counsel to the Special Committee.
Goldman Sachs & Co. LLC is acting as exclusive financial
advisor to EngageSmart.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as
legal counsel to General Atlantic.
Kirkland & Ellis LLP is acting as legal counsel to Vista
Equity Partners.
About EngageSmart
EngageSmart is a leading provider of vertically tailored
customer engagement software and integrated payments solutions. At
EngageSmart, our mission is to simplify customer and client
engagement to allow our customers to focus resources on initiatives
that improve their businesses and better serve their communities.
EngageSmart offers single instance, multi-tenant, true
Software-as-a-Service ("SaaS") vertical solutions, including
SimplePractice, InvoiceCloud and DonorDrive, that are designed to
simplify our customers' engagement with their clients by driving
digital adoption and self-service. As of June 30, 2023, EngageSmart
serves 109,700 customers in the SMB Solutions segment and 3,400
customers in the Enterprise Solutions segment across several core
verticals: Health & Wellness, Government, Utilities, Financial
Services, Healthcare and Giving. For more information, visit
www.engagesmart.com and follow us on LinkedIn.
About Vista Equity Partners
Vista is a leading global investment firm with more than $101
billion in assets under management as of June 30, 2023. The firm
exclusively invests in enterprise software, data and
technology-enabled organizations across private equity, permanent
capital, credit and public equity strategies, bringing an approach
that prioritizes creating enduring market value for the benefit of
its global ecosystem of investors, companies, customers and
employees. Vista's investments are anchored by a sizable long-term
capital base, experience in structuring technology-oriented
transactions and proven, flexible management techniques that drive
sustainable growth. Vista believes the transformative power of
technology is the key to an even better future – a healthier
planet, a smarter economy, a diverse and inclusive community and a
broader path to prosperity. Further information is available at
vistaequitypartners.com. Follow Vista on LinkedIn, @Vista Equity
Partners, and on Twitter, @Vista_Equity.
About General Atlantic
General Atlantic is a leading global investor with more than
four decades of experience providing capital and strategic support
for over 500 growth companies throughout its history. Established
in 1980 to partner with visionary entrepreneurs and deliver lasting
impact, the firm combines a collaborative global approach, sector
specific expertise, a long-term investment horizon and a deep
understanding of growth drivers to partner with great entrepreneurs
and management teams to scale innovative businesses around the
world. General Atlantic has more than $77 billion in assets under
management inclusive of all products as of September 30, 2023, and
more than 220 investment professionals based in New York,
Amsterdam, Beijing, Hong Kong, Jakarta, London, Mexico City, Miami,
Mumbai, Munich, San Francisco, São Paulo, Shanghai, Singapore,
Stamford and Tel Aviv. For more information on General Atlantic,
please visit: www.generalatlantic.com.
Cautionary Statement Regarding Forward-Looking
Statements
This communication includes certain “forward-looking statements”
within the meaning of, and subject to the safe harbor created by,
the federal securities laws, including statements related to the
proposed merger of the Company with Vista (the “Transaction”),
including financial estimates and statements as to the expected
timing, completion and effects of the Transaction. These
forward-looking statements are based on the Company’s current
expectations, estimates and projections regarding, among other
things, the expected date of closing of the Transaction and the
potential benefits thereof, its business and industry, management’s
beliefs and certain assumptions made by the Company, all of which
are subject to change. Forward-looking statements often contain
words such as “expect,” “anticipate,” “intend,” “aims,” “plan,”
“believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,”
“considered,” “potential,” “estimate,” “continue,” “likely,”
“expect,” “target” or similar expressions or the negatives of these
words or other comparable terminology that convey uncertainty of
future events or outcomes. By their nature, forward-looking
statements address matters that involve risks and uncertainties
because they relate to events and depend upon future circumstances
that may or may not occur, such as the consummation of the
Transaction and the anticipated benefits thereof. These and other
forward-looking statements are not guarantees of future results and
are subject to risks, uncertainties and assumptions that could
cause actual results to differ materially from those expressed in
any forward-looking statements. Important risk factors that may
cause such a difference include, but are not limited to: (i) the
completion of the Transaction on anticipated terms and timing,
including obtaining required stockholder and regulatory approvals,
and the satisfaction of other conditions to the completion of the
Transaction; (ii) the ability of affiliates of Vista to obtain the
necessary financing arrangements set forth in the commitment
letters received in connection with the Transaction; (iii)
potential litigation relating to the Transaction that could be
instituted against Vista, the Company or their respective
directors, managers or officers, including the effects of any
outcomes related thereto; (iv) the risk that disruptions from the
Transaction will harm the Company’s business, including current
plans and operations; (v) the ability of the Company to retain and
hire key personnel; (vi) potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the Transaction; (vii) continued availability of
capital and financing and rating agency actions; (viii)
legislative, regulatory and economic developments affecting the
Company’s business; (ix) general economic and market developments
and conditions; (x) potential business uncertainty, including
changes to existing business relationships, during the pendency of
the Transaction that could affect the Company’s financial
performance; (xi) certain restrictions during the pendency of the
Transaction that may impact the Company’s ability to pursue certain
business opportunities or strategic transactions; (xii)
unpredictability and severity of catastrophic events, including but
not limited to acts of terrorism, pandemics, outbreaks of war or
hostilities, as well as the Company’s response to any of the
aforementioned factors; (xiii) significant transaction costs
associated with the Transaction; (xiv) the possibility that the
Transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; (xv) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the Transaction, including in
circumstances requiring the Company to pay a termination fee or
other expenses; (xvi) competitive responses to the Transaction;
(xvii) the risks and uncertainties pertaining to the Company’s
business, including those set forth in Part I, Item 1A of the
Company’s most recent Annual Report on Form 10-K and Part II, Item
1A of the Company’s subsequent Quarterly Reports on Form 10-Q, as
such risk factors may be amended, supplemented or superseded from
time to time by other reports filed by the Company with the SEC;
and (xviii) the risks and uncertainties that will be described in
the Proxy Statement available from the sources indicated below.
These risks, as well as other risks associated with the
Transaction, will be more fully discussed in the Proxy Statement.
While the list of factors presented here is, and the list of
factors to be presented in the Proxy Statement will be, considered
representative, no such list should be considered a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material impact on the Company’s financial condition,
results of operations, credit rating or liquidity. These
forward-looking statements speak only as of the date they are made,
and the Company does not undertake to and specifically disclaims
any obligation to publicly release the results of any updates or
revisions to these forward-looking statements that may be made to
reflect future events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or
unanticipated events.
Important Additional Information and Where to Find It
In connection with the proposed transaction between the Company
and Vista, the Company will file with the SEC a Proxy Statement,
the definitive version of which will be sent or provided to Company
stockholders. The Company and affiliates of the Company intend to
jointly file a transaction statement on Schedule 13E-3 (the
“Schedule 13E-3”). The Company may also file other documents with
the SEC regarding the proposed transaction. This document is not a
substitute for the Proxy Statement or any other document which the
Company may file with the SEC. INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE PROXY STATEMENT, THE SCHEDULE 13E-3 AND ANY OTHER
RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors and security holders may obtain free copies of
the Proxy Statement, Schedule 13E-3 (when it is available) and
other documents that are filed or will be filed with the SEC by the
Company through the website maintained by the SEC at www.sec.gov,
the Company’s website at investors.EngageSmart.com or by contacting
the Company’s Investor Relations Team at IR@engagesmart.com.
The proposed transaction will be implemented solely pursuant to
the Merger Agreement dated as of October 23, 2023, among the
Company, Icefall Parent, LLC and Icefall Merger Sub, Inc., which
contains the full terms and conditions of the proposed
transaction.
Participants in the Solicitation
The Company and certain of its directors, executive officers and
other employees may be deemed to be participants in the
solicitation of proxies from the Company’s stockholders in
connection with the proposed transaction. Additional information
regarding the identity of the participants, including a description
of their direct or indirect interests, by security holdings or
otherwise, will be set forth in the Proxy Statement and other
materials to be filed with the SEC in connection with the proposed
transaction (if and when they become available). Information
relating to the foregoing can also be found in the Company’s proxy
statement for its 2023 annual meeting of stockholders, which was
filed with the SEC on April 5, 2023 (the “Annual Meeting Proxy
Statement”). To the extent holdings of securities by potential
participants (or the identity of such participants) have changed
since the information printed in the Annual Meeting Proxy
Statement, such information has been or will be reflected on the
Company’s Statements of Change in Ownership on Forms 3 and 4 filed
with the SEC. You may obtain free copies of these documents using
the sources indicated above.
1 Based on closing price of $18.71 on October 4, 2023.
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version on businesswire.com: https://www.businesswire.com/news/home/20231023294863/en/
Investors
Josh Schmidt EngageSmart, Inc. IR@engagesmart.com
Media
EngageSmart: Sharon Stern / Ed Trissel Joele Frank, Wilkinson
Brimmer Katcher ESMT-JF@joelefrank.com
Vista Equity Partners: Brian Steel media@vistaequitypartners.com
(212) 804-9170
General Atlantic: Emily Japlon media@generalatlantic.com
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