Vista Equity Partners acquires KnowBe4 in $4.6bn deal

January 2023 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

January 2023 Issue

In a testament to the success of its strategy and the strength of its team, software company KnowBe4, Inc. is to be acquired by private equity firm Vista Equity Partners in an all-cash transaction valued at approximately $4.6bn.

Under the terms of the merger agreement, KnowBe4 stockholders will receive $24.90 per share in cash for each share of common stock that they own upon completion of the transaction.

The per share purchase price represents a 44 percent premium to the company’s unaffected closing price on 16 September 2022, the last full trading day before Vista publicly disclosed its initial non-binding acquisition proposal on its Schedule 13-D.

“This acquisition by Vista represents the next phase of our journey,” said Stu Sjouwerman, founder, chairman and chief executive of KnowBe4. “KnowBe4 has a strong record of performance, as evidenced by our market-leading platform and global customer base. Under Vista’s ownership, we will have access to additional resources and support, which will help us achieve our goals and deliver enhanced value to our customers.”

As part of the acquisition process, an independent special committee of KnowBe4’s board of directors was formed to review the initial acquisition proposal, including evaluating transaction alternatives against KnowBe4’s standalone plan and other strategic alternatives, as well as other potential value creation opportunities.

Following this process, the special committee and the board each unanimously determined that the transaction with Vista was in the best interests of KnowBe4 and its stockholders.

As the provider of the world’s largest security awareness training and simulated phishing platform, KnowBe4 is used by more than 52,000 organisations around the globe. The company helps address the human element of security by raising awareness about ransomware, chief executive fraud and other social engineering tactics through a new-school approach to awareness training on security.

“As a significant investor in KnowBe4, we could not be more excited to take this next step in our journey together,” added Rod Aliabadi, managing director at Vista. “We have long appreciated the work that KnowBe4 does in strengthening the human layer of cyber security through educating employees on how to identify social engineering and related cyber threats.”

The transaction is expected to close in the first half of 2023, subject to customary closing conditions, including receipt of regulatory approvals and approval of KnowBe4 stockholders.

“As a trusted partner to enterprise software companies around the world, we make a point to invest in businesses that make a difference and have a demonstrated track record of success,” said Michael Fosnaugh, co-head of Vista’s flagship fund and senior managing director. “We look forward to leveraging our deep understanding of the business to help Stu and his talented and experienced team address the human element of cyber security.”

Serving as financial adviser to the special committee is Morgan Stanley & Co. LLC, with Potter Anderson & Corroon serving as legal adviser. Wilson Sonsini Goodrich & Rosati is serving as KnowBe4’s legal adviser. Serving as financial adviser for Vista is Guggenheim Securities, LLC, with Kirkland & Ellis LLP serving as legal counsel.

Mr Sjouwerman concluded: “We look forward to partnering with Vista’s team to continue empowering businesses worldwide to strengthen their human firewall and make smarter security decisions every day.”

Fraser Tennant