ConvergeOne, a leading global IT services provider of collaboration and technology solutions, today announced that it has entered into a definitive agreement with Forum Merger Corporation (Nasdaq: FMCI), a special purpose acquisition company. This transaction will enable ConvergeOne to become a Nasdaq-listed public company, with an anticipated initial enterprise value of approximately $1.2 billion. Immediately upon consummation of the transaction, Forum will change its name to ConvergeOne. Clearlake Capital Group, L.P., ConvergeOne’s current private equity sponsor, will remain the largest shareholder in the combined company upon completion of the transaction.
ConvergeOne Investment Highlights
- Leading, independent provider of IT services and collaboration solutions to a diversified roster of enterprise clients, including 57 of Fortune 100 Companies
- Large-scale player with managed services‐led approach and comprehensive engagement model addressing the $256 billion collaboration, enterprise networking, cloud and security market
- Highly recurring, managed services-led revenue model ensures high levels of visibility: 90% renewal rate for managed, cloud and maintenance services
- Proven platform with multiple avenues for continued growth:
- Active acquisition strategy, adding and integrating 12 service providers since 2009, with a strong pipeline of actionable acquisition opportunities in a highly fragmented market
- Growing cloud pipeline and security practice, combined with significant domestic and international geographic expansion opportunities, offer material organic growth prospects
- Compelling financial profile:
- Estimated $1.2 billion of revenue and $144 million of adjusted EBITDA in 2018
- Anticipated initial enterprise value of approximately $1.2 billion implying an 8.4x multiple of estimated 2018 adjusted EBITDA
- Differentiated structure enables attractive margin profiles: 32% gross margins and 12% adjusted EBITDA margins projected in 2018
- Strong, consistent growth in attractive markets, with 2007-2018E compounded annual growth rates (CAGRs) for revenue and adjusted EBITDA of 16% and 18%, respectively
- Strong anticipated cash flows with capital expenditures representing approximately 1% of historical sale
- Highly experienced and cohesive management team
Stephen Vogel, Executive Chairman of Forum, said: “After a comprehensive search process, in which our experienced public market professionals closely examined a host of potential business combination opportunities, ConvergeOne clearly stood out to us as the most impressive partner. The ConvergeOne executive team has successfully established ConvergeOne as a best-in-class provider of IT services and collaboration solutions. In addition to possessing an attractive financial profile, a differentiated business model and an established platform for future growth, ConvergeOne boasts a tremendous client-centric culture and an employee base with significant technical expertise. The caliber of their client base and the number of long-standing and expanding relationships they maintain with these blue-chip customers is a testament to the quality of ConvergeOne’s offerings. We are thrilled to help facilitate ConvergeOne’s listing on the Nasdaq, and are eager to watch John and the rest of the management team continue to grow the business as a public company.”
John A. McKenna Jr., Chairman and CEO of ConvergeOne, stated: “Today’s transaction announcement marks the beginning of an exciting new chapter in our history. At ConvergeOne, our goal has always been to solve our customers’ complex IT business challenges with innovative managed services and solutions. We are now serving over 9,000 diversified clients across various industries. We are proud of our successful partnership with Clearlake and grateful for the resources and industry insights the Clearlake team continues to bring to our business, and we are delighted to be entering into this transaction with Forum to become a publicly-traded company. It is an honor to lead ConvergeOne’s strategic direction and my pleasure to continue to work with our great team to continue to grow the business. With access to new sources of capital and liquidity, ConvergeOne will be able to address the complex collaboration challenges of large and global companies better than ever before.”
Following the completion of the business combination, the combined company will continue to be led by John A. McKenna Jr. as Chairman and CEO, as well as Jeff Nachbor (CFO), John Lyons (President, Field Organization) and Paul Maier (President, Services Organization).
Behdad Eghbali, Managing Partner and Co-Founder at Clearlake, said, “The results we have achieved working alongside ConvergeOne’s world-class management team are a perfect example of our intensive operational approach, O.P.S.®, as well as the buy-and-build strategies that we seek to employ with our portfolio companies. We are confident that this proposed path for ConvergeOne to become a publicly traded entity will prove tremendously beneficial, as evidenced by the fact that we will remain a significant shareholder in the Company moving forward. This transaction provides ConvergeOne with the opportunity to accelerate its existing growth initiatives and strategically expand offerings in collaboration, cloud and security, and we look forward to seeing its continued success and growth as a public company.”
About ConvergeOne
Founded in 1993, ConvergeOne is a leading global IT service provider of collaboration and technology solutions for large and medium enterprise with decades of experience assisting customers to transform their digital infrastructure and realize a return on investment. Over 9,000 enterprise and mid-market customers trust ConvergeOne with collaboration, enterprise networking, data center, cloud and security solutions to achieve business outcomes. Our investments in cloud infrastructure and managed services provide transformational opportunities for customers to achieve financial and operational benefits with leading technologies. Uniquely positioned, ConvergeOne has partnerships with more than 300 global industry leaders, including Avaya, Cisco, IBM, Genesys and Microsoft to customize specific business outcomes. We deliver solutions with a full life cycle approach including strategy, design and implementation with professional, managed and support services. ConvergeOne holds more than 2,100 technical certifications across hundreds of engineers throughout North America including three Network Operations Centers. More information is available at www.convergeone.com.
About Forum
Forum Merger Corporation is a blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic region. Forum Merger Corporation is led by Executive Chairman Stephen A. Vogel, Co-Chief Executive Officer and President Marshall Kiev and Co-Chief Executive and Chief Financial Officer David Boris. More information is available at www.forummerger.com.
About Clearlake
Clearlake Capital Group, L.P. is a leading private investment firm founded in 2006. With a sector-focused approach, the firm seeks to partner with world-class management teams by providing patient, long-term capital to dynamic businesses that can benefit from Clearlake’s operational improvement approach, O.P.S.® The firm’s core target sectors are software and technology-enabled services; industrials and energy; and consumer. Clearlake currently has over $3.5 billion of assets under management and its senior investment principals have led or co-led over 100 investments. More information is available at www.clearlake.com.
