KnowBe4, Inc. , the provider of the world’s largest security awareness training and simulated phishing platform, announced that it has entered into a definitive agreement to be acquired by Vista Equity Partners (“Vista”) in an all-cash transaction valued at approximately $4.6 billion on an equity value basis.

Under the terms of the merger agreement, KnowBe4 stockholders will receive $24.90 per share in cash upon completion of the proposed transaction. The per share purchase price represents a 44 percent premium to the Company’s unaffected closing price on September 16, 2022, the last full trading day before Vista publicly disclosed its initial non-binding acquisition proposal on its Schedule 13-D. As disclosed by KnowBe4 in a press release dated September 19, 2022, an independent Special Committee of KnowBe4’s Board of Directors (the “Special Committee”) was formed to review this proposal and other potential value creation opportunities.

“Today’s announcement is a testament to the success of our strategy and the strength of our incredible team. This acquisition by Vista represents the next phase of our journey,” said Stu Sjouwerman, founder, Chairman and Chief Executive Officer of KnowBe4. “KnowBe4 has a strong record of performance, as evidenced by our market-leading platform and global customer base. Under Vista’s ownership, we will have access to additional resources and support, which will help us achieve our goals and deliver enhanced value to our customers. We look forward to partnering with Vista’s team to continue empowering businesses worldwide to strengthen their human firewall and make smarter security decisions every day.”

“As a trusted partner to enterprise software companies around the world, we make a point to invest in businesses that make a difference and have a demonstrated track record of success,” said Michael Fosnaugh, Co-Head of Vista’s Flagship Fund and Senior Managing Director. “We look forward to leveraging our deep understanding of the business to help Stu and his talented and experienced team address the human element of cybersecurity.”

“As a significant investor in KnowBe4, we could not be more excited to take this next step in our journey together,” commented Rod Aliabadi, Managing Director at Vista. “We have long appreciated the work that KnowBe4 does in strengthening the human layer of cybersecurity through educating employees on how to identify social engineering and related cyber threats.”

Certain Terms, Approvals and Timing

Under the terms of the agreement, which was unanimously approved and recommended to the Board by the Special Committee and then unanimously approved and recommended for approval by the stockholders by KnowBe4’s Board of Directors, KnowBe4 stockholders will receive $24.90 in cash for each share of common stock that they own.

In connection with Vista’s initial acquisition proposal, KnowBe4, under the supervision of the Special Committee and its legal and financial advisors, engaged in a robust process, including evaluating transaction alternatives against KnowBe4’s standalone plan and other strategic alternatives. Following this process, the Special Committee and KnowBe4’s Board of Directors each unanimously determined that the transaction with Vista is in the best interests of KnowBe4 and its stockholders.

In connection with the transaction, Vista has entered into support agreements with Mr. Sjouwerman and investment funds affiliated with KKR and Elephant Partners. Under these agreements, which collectively account for approximately 83 percent of KnowBe4’s outstanding voting power, the applicable stockholders have agreed to vote all of their shares of KnowBe4 common stock in favor of the transaction, subject to certain terms and conditions contained therein, and to roll some of their existing equity into the acquiring company or purchase equity in the acquiring company. Vista intends to finance the transaction through a combination of debt and equity financing, including the rollover and investment contemplated by the support agreements.

The transaction is expected to close in the first half of 2023, subject to customary closing conditions, including receipt of regulatory approvals and approval by KnowBe4 stockholders. The transaction is subject to approval by the holders of (i) a majority of the voting power of KnowBe4’s outstanding common stock, (ii) a majority of the voting power of KnowBe4’s outstanding common stock not owned by Vista, certain members of KnowBe4’s management and stockholders rolling some or all of their existing equity in KnowBe4, and certain of their respective affiliates, including, but not limited to, Mr. Sjouwerman and investment funds affiliated with KKR and Elephant Partners, and (iii) a majority of the outstanding shares of each of KnowBe4’s Class A common stock and Class B common stock, voting as separate classes. Upon completion of the transaction, KnowBe4’s shares will no longer trade on the Nasdaq Global Select Market, and KnowBe4 will become a private company.

The foregoing description of the merger agreement and the transactions contemplated thereby is subject to, and is qualified in its entirety by reference to, the full terms of the merger agreement, which KnowBe4 will be filing on Form 8-K.