KnowBe4 Gets $4B Takeover Offer From Vista Equity Partners

The Tampa, Florida-based KnowBe4’s shares soared after the cybersecurity company confirms takeover bid by private equity firm.

KnowBe4 CEO Stu Sjouwerman

Seventeen months after going public, security awareness company KnowBe4 on Monday confirmed it has received a non-binding takeover offer valued at more than $4 billion from Vista Equity Partners.

Shares of the Tampa, Florida-based KnowBe4 shot up by 28 percent on Wall Street after the firm said in a filing on Monday that it received an acquisition bid of $24 a share from the Austin, Texas-based investment firm Vista Equity Partners.

The cash offer is 35 percent more than KnowBe4’s closing price on Friday. Based on the number of outstanding shares, the bid effectively values KnowBe4 at just over $4 billion.

KnowBe4, which was founded 2010 by current CEO Stu Sjouwerman , said it has set up a special committee of its board of directors to review Vista Equity’s offer.

“Consistent with its mandate, and in consultation with its legal and financial advisors, the Special Committee will carefully review the Vista proposal and other potential value creation opportunities to determine the course of action that it believes is in the best interests of KnowBe4 and its stockholders.”

The company added in its statement: “There is no certainty that any transaction will be consummated, and KnowBe4 does not intend to comment further until the Special Committee has concluded its review.”

In a letter to the special committee, Robert F. Smith, chairman and chief executive officer, Vista Equity Partners Management, noted that his firm has been an investor in KnowBe4 since 2021.

“We believe that our Proposal offers the Company’s shareholders a highly attractive opportunity to de-risk their investments with immediate liquidity at an extremely attractive premium valuation,” Smith wrote in his letter, filed late last week with the SEC.

“This offer reflects the completion of substantial business diligence and is supplemented by our deep knowledge of the business over the last 18 months of us being meaningful investors in the Company.”

Smith added: “Our Proposal is informed by significant work that we and our advisors have completed and by exploratory discussions about valuation with the Special Committee of the Board of Directors.”

KnowBe4, which describes itself as provider of security awareness training and simulated phishing platform, saw a strong second quarter in terms of finances.

The firm’s flagship product, Kevin Mitnick Security Awareness Training, focuses on enabling organizations to assess their social engineering risks and providing security awareness training to mitigate these risks, according to KnowBe4.

The company says that it generates “substantially all of our revenues from the sale of subscriptions to access our cloud-based platform,” according to a recent regulatory filing.

The firm has 1,600 employees and about 40 percent of its revenues are via the channel, a company representative said.

The firm’s overall revenues rose to $80.8 million in the second quarter, up 36 percent compared to the same period a year ago. Meanwhile, it’s annual reoccurring revue was also up by 36.5 percent year over year, with about 52,000 customers reached.

Net income in the second quarter was $3.3 million, up from a loss of $16.8 million during the same period a year ago.

KnowBe4 went public in April 2021, soaring on its first day of trading near $24 a share, or roughly what Vista Equity Partners is offering today.

In its filing, KnowBe4 said Morgan Stanley & Co. LLC is serving as financial advisor to the Special Committee, that’s assessing the Vista Equity offer.

The company acquired two companies last year to expand its offerings: MediaPro for a little more than $30 million and SecurityAdvisor for $80 million.