EngageSmart, a payments software vendor, announced that it would be taken private by Vista Equity Partners for about $4 billion. This marks the latest buyout deal in the technology sector.
Under the terms of the deal, shareholders in EngageSmart will receive $23 per share in cash. This represents a premium of nearly 23 percent to the stock’s closing price on Oct. 4.
General Atlantic owns a 52 percent stake in EngageSmart. Upon completion of the transaction, affiliates of Vista will hold roughly 65 percent and affiliates of General Atlantic will hold about 35 percent of the outstanding equity.
EngageSmart raised $378 million when it listed in New York in an initial public offering in 2021.
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.
This deal is the latest in a string of private equity buyouts of tech companies in recent months. In August, Thoma Bravo took identity and access management software firm ForgeRock private for $2.3 billion. In July, New Relic agreed to be taken private by TPG and Francisco Partners in a $6.5 billion deal.
The trend of private equity firms buying tech companies is likely to continue, as these firms see the sector as a good place to invest their capital. Tech companies are often growing rapidly and have strong cash flows, which makes them attractive to private equity firms.
For EngageSmart, being taken private could give the company more flexibility to invest in growth and innovation. Private equity firms typically have a longer investment horizon than public markets, which means they are willing to invest in companies for the long term.
