General Atlantic explores sale of software company EngageSmart -sources

EngageSmart

05/10/2023 17:30

(Adds process status, share reaction)
    By Milana Vinn
       Oct 5 (Reuters) - Private equity firm General Atlantic
LLC is exploring a sale of EngageSmart Inc  ESMT.N , a payments
software vendor that has a market value of $3.3 billion,
according to people familiar with the matter. 
    Investment banks Goldman Sachs Group Inc  GS.N  and Evercore
Inc  EVR.N  are working with EngageSmart on a sale process,
which is in its early stages, the sources said. 
        Several private equity firms are participating in the
process, the sources added. The first-round of bidding for the
company is underway, with initial offers due later on Thursday,
according to two of the sources.
  
    The sources, who requested anonymity because the matter is
confidential, cautioned that no deal is certain and General
Atlantic, which owns 54% of EngageSmart, could elect to sell
down its stake in the stock market over time.
    Spokespeople for General Atlantic and Goldman Sachs declined
to comment. EngageSmart and Evercore did not respond to requests
for comment. 
    EngageSmart shares jumped 7% on the news to $20.04 in New
York on Thursday. 
    EngageSmart software simplifies customer activities for
companies such as paying a bill and going paperless. The
Braintree, Massachusetts-based company serves clients across the
health and wellness, government, utilities and financial
services sectors. 
    The company reported in August a 28% year-on-year rise in
second-quarter revenue to $94.4 million as demand grew from
corporate clients. It reported $19.4 million in adjusted
earnings before interest, taxes, depreciation and amortization,
up from $12 million a year earlier.
    Investors, however, have been concerned about the potential
impact of a slowdown in consumer spending on EngageSmart's
business. Its shares have dropped almost 14% over the past 12
months, underperforming a 39% rise in the S&P 500 Application
Software index. 
    General Atlantic acquired a majority stake in the company,
previously known as Invoice Cloud, in 2018. Summit Partners, a
private equity firm that was already an investor in EngageSmart,
retains an approximately 15% stake. 
    EngageSmart raised $378 million when it listed in New York
in an initial public offering in 2021.

 (Reporting by Milana Vinn in New York; Editing by David
Gregorio and Chris Reese)
 ((Milana.Vinn@thomsonreuters.com; Twitter: @MilanaVinn; Reuters
Messaging: Signal/Telegram/WhatsApp: +1(347)463-7957))