December 06, 2023 | Technology | North America | Ended

EngageSmart / Vista Equity Partners: Deal Insight

Vista Equity Partners is set to take private EngageSmart, a customer engagement and payments company, through an all-cash buyout valued at $4.0bn, as announced by the companies on 23-Oct-23. EngageSmart shareholders will receive $23 per share in cash, representing a 22.9% takeover premium to its undisturbed price on 4-Oct-23, the day before Reuters reported that its majority shareholder, private equity firm General Atlantic (53.7%), was exploring a sale. The deal, unanimously recommended by the EngageSmart board, will result in affiliates of Vista holding 65% of the target, while General Atlantic will rollover its stake to own 35%. EngageSmart has entered into voting support agreements with affiliates of General Atlantic and Summit Partners (14.9%) thereby already securing commitments for 68.6%. The buyout, expected to close in 1Q’24, is subject to approval from a majority of i) EngageSmart outstanding shares, and ii) EngageSmart shares held by “unaffiliated shareholders”, which excludes shares held by General Atlantic. The deal is also contingent on HSR approval and the merger agreement stipulates a burdensome condition that restricts any remedy having a material adverse effect on the business. HSR was filed on 6-Nov-23, implying a 30-day waiting period expiry date of 6-Dec-23, while the preliminary proxy was filed on 20-Nov-23. The shareholder meeting will be scheduled 30 days after the mailing of the definitive. A 30-day go-shop period expired on 22-Nov-23, with no third parties coming forward. Vista plans to finance the deal solely from fully committed equity financing. The termination fee is $144.4m and monetary damages for agreement breaches are capped at $288.7m. The long stop date is 23-May-24. EngageSmart, headquartered in Braintree, Massachusetts, provides customer engagement software-as-a-service (SaaS) platforms. Specifically, it offers software and payment solutions that simplify and automate workflow tasks, such as paying a bill, setting up an appointment, and viewing customer histories, for businesses across various industries. General Atlantic acquired a majority stake in ...

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