Imprivata acquired by Thoma Bravo: fairness opinion by Barclays
Deal terms
Implied value per share by method vs. $19.25 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Barclays to the target board
Discounted cash flow assumptions
Included estimated present value of Imprivata's NOL tax benefits using NOL balance and a 37% tax rate; stock-based compensation treated as a cash expense; net debt as of June 30, 2016 subtracted.
Selected public companies (12)
Benefitfocus, Inc. · FireEye, Inc. · Mimecast Limited · Rapid7, Inc. · VASCO Data Security International, Inc. · Vocera Communications, Inc. · athenahealth, Inc. · Computer Programs & Systems, Inc. · CyberArk Software Ltd. · Imperva, Inc. · Medidata Solutions, Inc. · Quality Systems, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / CY2016E Revenue | 1.5x | — | 7.9x | 2.5x–3.5x | $14.83–$19.48 |
| EV / CY2017E Revenue | 1.4x | — | 6.5x | 2.0x–3.0x | $14.56–$20.23 |
Selected precedent transactions (19)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2016-05-18 | inContact, Inc. | NICE Ltd. | — |
| 2016-05-02 | Opower, Inc. | Oracle Corporation | — |
| 2015-08-10 | Yodlee, Inc. | Envestnet, Inc. | — |
| 2015-05-27 | Rally Software Development Corp. | CA, Inc. | — |
| 2015-04-30 | ClickSoftware Technologies Ltd. | Francisco Partners Management LLC | — |
| 2015-02-05 | E2open, Inc. | Insight Venture Partners, LLC | — |
| 2014-01-30 | Accelrys, Inc. | Dassault Systemes SA | — |
| 2013-09-23 | Greenway Medical Technologies, Inc. | Vista Equity Partners Fund IV, LP | — |
| 2012-01-17 | Convio, Inc. | Blackbaud, Inc. | — |
| 2010-08-13 | Unica Corporation | International Business Machines Corporation | — |
| 2016-05-31 | SciQuest, Inc. | Accel-KKR Company LLC | — |
| 2016-04-28 | Textura Corporation | Oracle Corporation | — |
| 2015-11-02 | Constant Contact, Inc. | Endurance International Group Holdings, Inc. | — |
| 2015-08-06 | Merge Healthcare Incorporated | International Business Machines Corporation | — |
| 2013-01-07 | Epocrates, Inc. | athenahealth, Inc. | — |
| 2012-11-28 | Retalix Ltd. | NCR Corporation | — |
| 2012-08-27 | Deltek, Inc. | Thoma Bravo, LLC | — |
| 2010-06-09 | Eclipsys Corporation | Allscripts-Misys Healthcare Solutions, Inc. | — |
| 2010-04-16 | Phase Forward Incorporated | Oracle Corporation | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue (primary precedent transactions) | — | 4.0x | — | 3.5x–4.5x | $18.00–$22.22 |
| EV / FTM Revenue (primary precedent transactions) | — | 3.5x | — | 3.0x–4.0x | $18.66–$23.80 |
| EV / LTM Revenue (other precedent transactions) | — | 2.8x | — | — | — |
| EV / FTM Revenue (other precedent transactions) | — | 2.5x | — | — | — |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| 52-week historical trading range | Historical closing trading prices of Imprivata common stock during the 52-week period ended July 11, 2016, low and high closing prices of $9.00 to $21.63 per share. | $9.00–$21.63 |
| Analyst price targets | Securities research analysts' per share price targets for Imprivata common stock as of July 11, 2016 ranged between $14.00 and $20.00 per share. | $14.00–$20.00 |
| Leveraged acquisition (LBO) analysis | Assumed $75 million pay-in-kind debt capital structure, equity return of 20% to 25% over 4.5 years and projected EBITDA terminal multiple range of 9.5x to 13.5x applied to the Company Projections. | $13.06–$19.00 |
| Premiums paid analysis (1-day) | First and third quartile premiums paid in U.S. technology transactions between January 1, 2012 and July 11, 2016 valued between $200 million and $1.25 billion, applied to Imprivata's July 11, 2016 closing price of $14.37. | $17.68–$20.69 |
| Premiums paid analysis (30-trading-day average) | Same premium quartiles applied to Imprivata's thirty-day average closing price as of July 11, 2016 of $13.82. | $17.27–$20.45 |
Fee of $750,000 related to delivery of opinion; additional compensation of approximately $9.8 million payable on completion, against which the opinion fee is credited. Barclays received approximately $1 million for an August 2015 secondary offering; received approximately $12-13 million from Thoma Bravo and affiliates from January 1, 2013 to July 12, 2016.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $176M | $219M | $267M | $318M | 21.8% |
| Revenue growth | 22.2% | 24.7% | 21.6% | 19.1% | |
| EBITDA | $5.9M | $24.9M | $44.0M | $63.4M | 120.7% |
| EBITDA growth | — | 322.0% | 76.7% | 44.1% | |
| EBITDA margin | 3% | 11% | 16% | 20% | |
| Implied EV / EBITDA | 92.2x | 21.8x | 12.4x | 8.6x |
Year-1 growth is against LTM at announcement ($144M revenue, $-7.7M EBITDA); later years are year over year.
Imprivata management prepared the "Company Projections," standalone long-term financial projections for CY2016E through CY2020E, provided to the Board and to Barclays. Total revenue grows from $143.9 million in CY2016E to $318.0 million in CY2020E; Adjusted EBITDAS moves from $(7.7) million in CY2016E to $63.4 million in CY2020E, and unlevered free cash flow (derived by Barclays) from $(13.0) million to $49.5 million. Earlier preliminary versions (April 7, 2016 and May 27, 2016 Preliminary Company Projections) were updated for maintenance renewal balances and estimated 1H 2016 results; a subset of the May 27 version was provided to Thoma Bravo on June 3, 2016.
Process notes
Other Digital / HealthTech fairness opinions
- Press Ganey Holdings / EQT 2016 · 16.1x EV/EBITDA
- Everyday Health / Ziff Davis 2016 · 10.3x EV/EBITDA
- WebMD / Internet Brands 2017 · 11.9x EV/EBITDA
- Merge Healthcare / IBM Watson Health 2015 · 19.5x EV/EBITDA
- Athenahealth / Veritas Capital / Evergreen Coast Capital 2018 · 15.5x EV/EBITDA
- Cotiviti / Verscend Technologies 2018 · 16.3x EV/EBITDA