By Mikolaj Borowiak, Argiro Charizona, Sonia Andrzejuk, Vlad Marcu (Bocconi), Gabriela Lenerte, Carl-Gabriel Jakobsson (Stockholm School of Economics)
Photo: Evangeline Shaw (Unsplash)
Overview of the deal
Acquirer: Blackstone
Target: Cvent
Total Transaction Size: $4.6bn
Announced date: March 14, 2023
Expected close date: Mid-year 2023
Target advisors: Qatalyst Partners (Financial), Kirkland & Ellis LLP (Legal)
Acquirer advisors: Evercore, Morgan Stanley & Co. LLC and UBS (Financial), Simpson Thacher & Bartlett LLP (Legal)
On March 14, 2023 Cvent, an industry-leading meetings, events and hospitality technology provider, announced that it had entered into a definitive agreement to be acquired by an affiliate of private equity funds managed by Blackstone in a transaction valued at an enterprise value of approximately $4.6 billion. A wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) will be a significant minority investor alongside Blackstone. Vista Equity Partners, the technology investment firm that is the majority stockholder of Cvent, has agreed to invest a portion of its proceeds as non-convertible preferred stock in financing for the transaction.
According to the terms of the deal, shareholders will receive around $8.50 per share, representing a premium of around 52% on the volume-weighted average price in the three-month period leading to the end of January, when reports first surfaced that Cvent was the subject of a fresh acquisition bid.
“As one of the world’s largest private equity firms, Blackstone brings deep expertise in the event and hospitality industry, and with their backing, we plan to continue to invest in our business and deliver the innovative solutions that meet our customers’ needs and power the meetings and events ecosystem.” - Reggie Aggarwal, Founder and CEO (Cvent)
Company Details (Acquirer - Blackstone)
Blackstone is the world’s largest alternative asset manager, managing $975bn. It was founded by Stephen A. Schwarzman and Peter G. Peterson in New York in 1985. It serves institutional and individual investors by building strong businesses, whereof more than 12,000 real estate assets and 250 portfolio companies. Blackstone has generated $282bn in gains for investors, including retirement systems representing more than 100 million pensioners. Its sizable private equity business has been one of the largest in leveraged buyouts for many years.
Founded in 1985, headquartered in New York City, US
CEO: Stephen A. Schwarzman
Number of employees: 4,695
Market Cap: $100.1bn (as of 06/04/2023)
LTM Revenue: $8.5bn
LTM EBT: $3.6bn
LTM P/E: 35.3x
LTM P/BV: 7.7x
Recent Transactions: Acquisition with Rivean Capital of Edsec Solar Group (Dec 2022); $359mn majority stake acquisition of R Systems (Nov 2022); majority stake acquisition of Emerson’s Climate Technologies business, valuation $14bn (Oct 2022)
Company Details (Target - Cvent)
Cvent is a publicly held software-as-a-service (SaaS) company: a global event marketing and management technology leader that offers software in-person and virtual event solutions for online event registration, in-event engagement, venue selection, event apps, e-mail marketing, and web surveys. Cvent solutions optimize the entire event marketing and management value chain and have enabled clients around the world to manage millions of meetings and events.
Founded in 1999, headquartered in Tysons Water, Virginia
CEO: Reggie Aggarwal
Number of employees: 4,800+
Market Cap: $4.1bn (as of 07/04/2023)
EV: $4.2bn
LTM Revenue: $630.6mn
LTM EBITDA: (18.9mn)
EV/Revenue: 6.7x
EV/EBITDA: n.m.
Projections and Assumptions
Short-term consequences
According to the terms of the deal, shareholders of Cvent would get $8.50 in cash per share - a 52 percent premium to the volume-weighted average share price during the 90 days up to January 30, 2023, the day before media rumours of a prospective sale were released. In connection with the acquisition, a fully owned subsidiary of the Abu Dhabi Investment Authority (ADIA) will participate as a sizable minority investor.
The Cvent Board of Directors unanimously approved the merger deal on the advice of a special committee composed exclusively of independent and disinterested directors. Subject to the fulfilment of customary closing conditions, which include receiving approval from Cvent's investors and other governmental clearances, the deal is anticipated to conclude in the middle of 2023. After the deal, Cvent will become a privately held corporation and its common stock will no longer be traded on any public exchanges.
Blackstone's investment in Cvent is most likely attributable, in large part, to the fact that one of Blackstone’s highest-conviction investing themes is the recovery of events and travel. According to David Schwartz, a Senior Managing Director at Blackstone, the company feels it is well-positioned as a development partner for this firm given its significant expertise in the hospitality, events, and real estate industries.
Long-term Upsides
By acquiring Cvent, Blackstone can contribute with its extensive knowledge in the hospitality and events sector to help Cvent grow and expand its operations through innovative solutions. Cvent is one of Blackstone's several investments in travel recovery, which is one of Blackstone’s highest conviction investment themes. Along with the management of Cvent, Blackstone aims to continue to keep Cvent an industry leader that delivers world-class technology solutions.
The events and hospitality industry was devastated by the COVID-19 pandemic but is on the road to recovery. Blackstone’s investment in Cvent displays its confidence in the growth prospects of the industry. Leveraging Blackstone's industry expertise and backing, Cvent can capitalise on the opportunities presented by the industry’s recovery.
In terms of synergies, Blackstone could help Cvent reduce costs and streamline its operations, which could improve its profitability over time. However, the realisation of these synergies is not guaranteed and will depend on the effective integration of the capabilities. Lastly, although ESG-implications are not central to the transaction, Blackstone will need to continue to prioritise ESG factors related to Cvent to maintain its reputation.
Risks and Uncertainties
One of the major risks is that the event management software industry is highly competitive and subject to rapid technological advancements and changes, which could render Cvent's technology obsolete or fail to meet the evolving needs of customers. Furthermore, any merger between two companies is likely to result in operational disruptions and integration challenges. In this case, Blackstone and ADIA will need to integrate Cvent's operations with their existing portfolio companies and ensure alignment of strategies and operations. Additionally, given the current technology sell-off in the market, SaaS companies such as Cvent could face further risks, which could be a concern for Blackstone as it looks to exit its investment in a bull market.
Investors have also been cautioned that actual results may differ from the projections due to a variety of known and unknown risks and uncertainties. These risks include potential delays or failure to complete the merger, failure to satisfy conditions to the consummation of the proposed transaction, adverse effects on the Company's business and stock price, the possibility of the termination of the merger agreement, risks related to the announcement and pendency of the proposed transaction, potential litigation, and unexpected costs and expenses resulting from the merger.
“The newly digitized events landscape, coupled with Cvent’s strong existing customer base and commitment to innovation, has provided a new growth vector in a post-COVID world.” - Monti Saroya, Chairman of the Cvent Board of Directors, Co-Head of the Vista Flagship Fund and Senior Managing Director
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