Sumeru Equity Partners to acquire Q4 in $257m deal

Q4 Inc., the leading capital markets access platform, today announced that it has entered into a definitive arrangement agreement with an entity controlled by Sumeru Equity Partners, a leading technology-focused investment firm that provides growth capital, operating expertise, and scaling partnership to enterprise technology companies in North America and Europe.

Pursuant to the Arrangement Agreement, the Purchaser will acquire all of the outstanding common shares of the Company (“Common Shares”) for $6.05 per Common Share, other than those held by certain shareholders rolling their equity interests, by way of an arrangement transaction (the “Arrangement”). Pursuant to the Arrangement Agreement, funds associated with Ten Coves Capital (“Ten Coves”), Darrell Heaps, the Founder, President and Chief Executive Officer of the Company, Neil Murdoch, a director of the Company, and another individual shareholder (collectively, the “Rolling Shareholders”) will exchange an aggregate of 13,715,467Common Shares for equity interests in the Purchaser having an equity value equivalent to the cash purchase price payable under the Arrangement. Completion of the Arrangement is subject to obtaining shareholder and other customary approvals. The Arrangement represents an aggregate total equity value of approximately $257m on a fully-diluted, in-the-money basis, inclusive of the Common Shares to be sold by the Rolling Shareholders (the “Rollover Shares”). Upon completion of the Arrangement, Q4 will become a privately held company.

The cash purchase price represents a premium of approximately 36% to the closing price of the Common Shares on the Toronto Stock Exchange (the “TSX”) on November 10, 2023, the last trading day prior to the announcement of the Arrangement, a premium of approximately 43% to the 20 day volume-weighted average trading price of the Common Shares as at that date, and a premium of approximately 46% to the 60-day volume-weighted average trading price of the Common Shares on the TSX.

Julie Silcock, Independent Director of the Q4 Inc. Board said, “We are pleased to have reached this agreement with Sumeru Equity Partners, which delivers significant, immediate value to shareholders. The Board is unanimous in its belief that today’s transaction appropriately reflects the Company’s innovative and strong business while maximizing shareholder value, and I am immensely proud to have worked alongside Q4’s outstanding management team and my fellow Directors to transform Q4 at this time.”

“I am very pleased about this significant milestone in our journey,” said Darrell Heaps, Founder and CEO of Q4 Inc. “Sumeru’s belief in our vision and their exceptional track record in supporting founders and management teams speaks volumes. I am excited to collaborate with them and drive category-defining growth, building the next great capital markets platform company. Q4 has become a central force in how thousands of public companies communicate and engage with the market. The Q4 Platform, fueled by innovative technology, data, and insights, empowers our customers to communicate their investment story to the world. It enables them to identify and target investors strategically, helping them build a strong shareholder base. The Sumeru team possesses a deep understanding of our business and their support will enable us to further build on our exceptional culture, while investing in our strategic initiatives, and expanding our platform to help our customers win in the capital markets.”

“We have long admired Q4’s innovation leadership in the investor relations market—offering unified capital markets access software for IR organizations of all sizes,” said Sumeru’s Mark Haller, Managing Director, and Jack McCabe, Principal. “Q4 is well-positioned for growth given its single, integrated platform across IR websites, virtual events, investor targeting and real-time analytics. We are excited to partner with Darrell Heaps and the Q4 team to accelerate the Company’s growth, expand its product capabilities and broaden customer relationships.”

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The Arrangement resulted from a review process undertaken by the Company following inbound interest from Sumeru and several others since the Company completed its initial public offering in 2021. The process and negotiation of the Arrangement with Sumeru were supervised by a committee of independent directors (the “Special Committee”). The Company entered into the Arrangement Agreement based on the unanimous approval of the Company’s board of directors (the “Board”), with conflicted directors abstaining, and the unanimous recommendation of the Special Committee that the Arrangement is in the best interests of the Company and fair to the holders of the Common Shares (the “Shareholders”) (other than the Rolling Shareholders). The Arrangement Agreement was the result of a comprehensive negotiation process that was conducted at arm’s length with the supervision and involvement of the Special Committee, as advised by independent and highly qualified legal and financial advisors.

The Rolling Shareholders are rolling an aggregate of 13,715,467Rollover Shares (the “Rollover”) at an implied value per Common Share equal to $6.05 per Common Share. The Rollover Shares represent approximately 34.1% of the issued and outstanding Common Shares.

The Board, with Mr. Heaps, Mr. Murdoch and nominees of Ten Coves, being Messrs. Ned May and Dan Kittredge, declaring their conflicts of interest and abstaining from voting, unanimously approved the Arrangement Agreement following receipt of the unanimous recommendation of the Special Committee. The Special Committee was appointed by the Board to, among other matters, review the potential transaction and potential alternatives and consider the Company’s best interests and the implications to Shareholders and other stakeholders. The Board unanimously, with the conflicted directors abstaining from voting, recommends that Shareholders vote in favour of the Arrangement. The Company intends to call and hold a special meeting of Shareholders in the first quarter of 2024 (the “Special Meeting”), where the Arrangement will be considered and voted upon by Shareholders of record. Further information regarding the Special Meeting, including the record and meeting date will be made available in December.

Raymond James is acting as exclusive financial advisor to the Special Committee. Stifel Canada is acting as independent valuator to the Special Committee. Osler, Hoskin & Harcourt LLP is acting as legal advisor to the Company. Dorsey & Whitney LLP is acting as special U.S. legal advisor to the Company. McCarthy Tétrault LLP is acting as legal advisor to the Special Committee. Blake, Cassels & Graydon LLP is acting as legal advisor to the Rolling Shareholders. National Bank Financial Inc. is acting as exclusive financial advisor to Sumeru. Gibson, Dunn & Crutcher LLP and Stikeman Elliott LLP are acting as legal advisors to Sumeru.

Source: Q4

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