Investment By Leading Private Equity Firm Provides Incremental Capital for Future M&A Opportunities and Brings Value-Added Support for Long-Term Value Creation

Upland Software, Inc. announced today a $115 million strategic equity investment from HGGC, a leading private equity firm with over $6.8 billion of cumulative capital commitments. The HGGC investment, in the form of a new class of convertible preferred stock issued at a premium to Upland’s current market price, provides incremental capital intended to capture the attractive M&A opportunity set that is expected to emerge as a result of the current macroeconomic environment. It also brings additional strategic and operational support as HGGC and Upland work together to strengthen the company’s go-to-market capability to fully leverage the value of its enterprise customer base and strong product portfolio.

“We are delighted to partner with Jack and the Upland team on this next chapter of growth and value creation”

“HGGC has a proven track record of building value in the software sector through deploying capital and partnering with management teams to enhance customer value and drive growth, both organically and through acquisitions,” said Jack McDonald, Upland’s Chairman and Chief Executive Officer. “The HGGC partnership, operational and strategic resources and long-term investment horizon will help us to fully capitalize on the once-in-a-decade acquisition opportunity we see emerging as recent turmoil in financial markets fundamentally reshapes funding and valuations for venture backed cloud software companies.”

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“We are delighted to partner with Jack and the Upland team on this next chapter of growth and value creation,” said David Chung, Partner and Co-Chief Investment Officer of HGGC. “After a rigorous strategic, financial, and operational due diligence and partnering process, we are extremely impressed by the strength of Upland’s operating and acquisitions platform, enterprise customer base, and product portfolio,” he added. “In addition to the M&A opportunity, we see a significant opportunity ahead to create long-term value for shareholders by building a world-class go-to-market engine that leverages the inherent strengths of Upland’s business and market position to drive higher organic growth over time.”

The financial terms of the newly issued convertible preferred stock are as follows, subject to the terms and conditions set forth in the definitive agreements:

• $115 million of convertible preferred stock, which is convertible into shares of Upland Software common stock at a conversion price of $17.50 per share, representing a premium of 30% over Upland’s closing price on July 13, 2022;
• The preferred stock carries a 4.5% dividend, which will be payable at the company’s option in cash or in-kind;
• On an as-converted basis, the preferred stock currently represents approximately 17% of Upland’s common shares outstanding; and
• In connection with the HGGC investment, Upland expects to appoint David Chung of HGGC as a new director to our board.

In the 12 years since Upland was founded, it has built a cloud software business serving 1,800+ enterprise customers, with over 1,000 team members around the world. The HGGC investment will add incremental capital resources to Upland’s balance sheet and, together with Upland’s internally generated cash flow and existing Term Loan B (TLB) credit facility, will provide a strong base of capital for future acquisitions. Pro forma for the HGGC investment, net of estimated fees and expenses, as of March 31, 2022, our latest reported quarter, Upland’s cash on hand would have been approximately $240 million and the ratio of net debt to AEBITDA for the twelve months ended March 31, 2022 would have been approximately 2.9x. Upland’s long-term TLB credit facility matures in 2026, has no financial covenants, requires 1% per year principal amortization and has a 5.4% locked interest rate on current outstanding borrowings.

The purchase of the convertible preferred stock by HGGC is expected to close promptly following the satisfaction of customary terms and conditions, including the expiration of the Hart-Scott-Rodino Act notice period.

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