Model N Receives $30.00 Cash Offer from Vista

By Bobby Samwell • Monday, April 22 15:21 • Permanent Link

Model N, Inc. recently announced its preliminary results through Q2'FY24, which ended on March 31, 2024, along with the current estimates. The company highlighted a robust transaction process that led to the Vista offer of $30.00 cash per share, representing the highest price proposed after extensive negotiations with the board.

The offer represents a 23% premium to the 30-trading day volume-weighted average price (VWAP) as of January 10, 2024, and a 16% premium to the 30-trading day VWAP as of April 5, 2024. Additionally, the transaction is fully equity backstopped by Vista and is expected to close in mid-2024, subject to customary closing conditions, including approval by Model N shareholders and clearance under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976.

Model N emphasized that the transaction delivers certain cash value at an attractive valuation, representing a premium multiple to publicly traded software peers. The growth-adjusted forward revenue multiple of 0.95x and the 28x last twelve months adjusted EBITDA (LTM adj. EBITDA) are indicators of the compelling value offered to shareholders.

The company also highlighted the challenges it faces, post-SaaS transitions, including the need for significant acceleration in non-SaaS transition revenue streams. Model N emphasized the critical juncture it is at, with the saas transitions being 85%+ complete and the challenges it anticipates in driving long-term growth.

The press release also mentioned the board's consideration of new execution and growth challenges post-SaaS transitions, emphasizing the risk associated with sustaining professional services revenues at current levels as SaaS transitions conclude.

Furthermore, the company highlighted that it ran a robust sale process to maximize value for shareholders, reaching out to 12 parties, including 9 financial sponsors and 3 strategics. Vista was the only party to submit a formal proposal, eventually increasing its offer to $30.00 per share, which the Model N board unanimously recommended that shareholders vote for.

The market has reacted to these announcements by moving the company's shares 0.1% to a price of $29.64. For more information, read the company's full 8-K submission here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.