Thoma Bravo acquires cloud software provider EQS Group
Munich/ London - EQS Group AG (“EQS”), a leading international cloud software provider in the areas of corporate compliance, investor relations and ESG, and Thoma Bravo, a leading software investment firm, have today signed an investor agreement pursuant to which Thoma Bravo will support the future growth of EQS and launch a public tender offer (the “Offer”) for all outstanding shares at an offer price of EUR 40.00 per share in cash.
New regulations such as the EU Whistleblowing Directive are increasing the demand for innovative compliance software solutions. EQS will benefit from Thoma Bravo’s experience and expertise in software and operations to accelerate product innovation and fully capitalize on the company’s long-term growth opportunities in Europe. Thoma Bravo’s investment will also enable EQS to finance future growth initiatives and potential acquisitions with the aim of jointly developing the European market for compliance software. This includes investments in EQS’ plans to address the increasingly complex requirements in the investor relations and corporate compliance environment, in particular the demand for automated and simplified processes on a single secure and integrated platform.
EQS and Thoma Bravo are convinced that such investments are best made outside the stock market. In addition, the investor agreement sets out the cornerstones of the partnership, which also include assurances to employees, business partners and other stakeholders. As part of the partnership, Thoma Bravo has undertaken to provide additional capital upon completion of the offer by subscribing to a cash capital increase of 10% of the EQS shares at the offer price. The transaction is Thoma Bravo’s first investment in a German company.
“EQS is a unique German software company that develops innovative solutions for the three megatrends of digitalization, regulation and ESG and is growing profitably thanks to these trends,” said Irina Hemmers, Partner at Thoma Bravo. “Together with Achim Weick and the experienced team at EQS, we will develop the platform into a pan-European compliance and ESG champion. This will benefit clients whose requirements are constantly changing in this very dynamic market. We are very much looking forward to working with the EQS management team on the further development of state-of-the-art software solutions.”
“Over the past 23 years, EQS has grown into a leading RegTech company providing software solutions to thousands of customers, including all DAX40 companies as well as blue chip companies worldwide. From day one, we have firmly believed that transparency creates the most important business asset: trust. We enable companies not only to reach important milestones in the capital markets, but also to gain and maintain the trust of all stakeholders. The collaboration with Thoma Bravo will enable us to embark on the next chapter of our growth story. Together we will successfully establish our EQS COCKPIT as the leading European compliance management system for companies of all sizes,” said Achim Weick, founder and Chief Executive Officer of EQS. “With its software expertise, many years of experience and enthusiasm for transformative technologies, Thoma Bravo is the right partner to support our growth plans.”
Today’s announcement is the result of a structured process in which the EQS Executive Board has been in intensive dialog with selected interested parties over the past months in order to find the right partner and achieve the best possible outcome for EQS and its shareholders.
Key data of the transaction
Thoma Bravo will offer EQS shareholders EUR 40.00 per share in cash. The offer represents a very attractive premium of 53% over the XETRA closing price of EQS on November 15, 2023, the last trading day prior to this publication, and 61% over the volume-weighted average share price over the last three months prior to this date (VWAP). Based on the offer price, the market capitalization will amount to approximately EUR 400 million. Thoma Bravo and EQS are convinced that the offer offers an extremely attractive opportunity for all EQS shareholders to realize a significant part of the potential future value appreciation ahead of time.
Thoma Bravo has already secured a stake of approximately 60% of all outstanding EQS shares through irrevocable tender agreements with EQS major shareholders, including Achim Weick, the CEO of EQS, whereby Achim Weick will also reinvest part of his stake in EQS into the new holding structure. All major shareholders will receive the same offer price under these agreements.
Thoma Bravo financed the transaction entirely with equity from its funds.
The Management Board and the Supervisory Board of EQS welcome and support the Offer and intend, subject to review of the Offer Document, to recommend that all EQS Shareholders accept the Offer. In addition to Achim Weick’s obligation to tender and partially reinvest, the other members of the Management Board have also agreed to tender their EQS shares as part of the offer.
Strong strategic fit
Thoma Bravo has over 20 years of experience in supporting fast-growing software companies with capital and expertise. The investment company has acquired or invested in over 450 software and technology companies. Having deployed more than €10 billion of equity across 11 transactions in Europe over the last 12 years, this transaction is Thoma Bravo’s first platform investment in Germany.
EQS is a leading international developer and provider of cloud software solutions in the areas of corporate compliance, investor relations and ESG. EQS’ leading compliance and investor relations software solutions enable thousands of companies worldwide to securely meet complex regulatory requirements, minimize risk and report transparently on corporate performance and its impact on society and the environment.
“We have followed the impressive growth of EQS over many years. The company has established itself as a leading provider of software solutions that ensure regulatory compliance and efficient capital markets,” said Will Downing and David Tse, Vice Presidents of Thoma Bravo. “EQS is very well positioned to be the partner of choice for companies in an increasingly complex compliance and reporting environment. The new EU regulations in particular increase the need for software workflows to improve transparency and build trust. We look forward to working with the EQS team to further grow the business through organic product innovation and M&A activity.”
Details of the transaction
The Offer is subject to customary offer conditions, including regulatory approvals, but will not include a minimum acceptance threshold. The transaction is expected to be completed in January or February 2024.
EQS and Thoma Bravo have agreed that the EQS management board will apply for the revocation of the inclusion of the EQS shares in the open market immediately after completion of the Offer. A separate delisting offer will not be required.
Further details of the Offer, including the terms and conditions, will be set out in the Offer Document, upon publication of which the Offer Acceptance Period will commence. As EQS Group is not listed on the regulated market, the Offer is not subject to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz — WpÜG). The offer document (in German and English) and other information in connection with the Offer will be published on the following website: www.cloud-solutions-offer.com.
Consultant EQS: Goldman Sachs Bank Europe SE is acting as financial advisor and GLNS as legal advisor to EQS.
Advisor Thoma Bravo: ParkView Partners as financial advisor and Kirkland & Ellis as legal advisor.
About Thoma Bravo
Thoma Bravo is one of the largest software investors in the world with assets under management of more than USD 131 billion (as of June 30, 2023). With private equity, growth equity and credit strategies, the company invests in growth-oriented, innovative companies operating in the software and technology sectors. Thoma Bravo leverages its deep industry knowledge and proven strategic and operational capabilities to work with its portfolio companies to implement best practices in operations and drive growth initiatives. Over the past 20 years, the company has acquired or invested in more than 450 companies with an enterprise value of over 250 billion US dollars — including investments with and without a controlling influence. The company has branches in Chicago, London, Miami, New York and San Francisco. Further information can be found at www.thomabravo.com.
EQS is a leading international cloud software provider in the areas of corporate compliance, investor relations and sustainability. Over 10,000 companies worldwide use EQS products to build trust by reliably and securely meeting complex regulatory requirements, minimizing risk and reporting transparently on their business performance and its impact on society and the climate. EQS products are bundled in the cloud-based EQS COCKPIT software. This allows compliance processes in the areas of whistleblower protection and case handling, policy management and approval processes to be managed just as professionally as business partner management, insider list management and reporting obligations. Listed companies also use a global newswire, investor targeting and contact management, as well as IR websites, digital reports and webcasts for efficient and secure investor communication. EQS also offers software for the management of ESG data (environmental, social, governance), the fulfillment of human rights due diligence obligations along corporate supply chains, and for compliant sustainability reporting. EQS was founded in Munich in 2000. Today, the Group has around 600 employees in the world’s most important financial centers.