EQT Private Equity, part of a publicly listed investment firm (EQT AB Group) is taking Billtrust (BTRS) private. Billtrust went public (via SPAC) in early 2021. Wrap your head around those two sentences for a minute and marvel at modern capitalism.
I’m not going to write a lot about Billtrust because they have an excellent investor presentation available here. (I’d suggest downloading it before it disappears!)
Billtrust is a leader in the accounts receivable space, with a burgeoning payments acceptance and payments network business. The company began in e-billing, expanded into broader AR functions, became a payment facilitator, and eventually built a payments network by connecting to AP providers. It really is a pioneer.
The EQT/Billtrust Deal
I don’t normally opine on valuations, but in this case, I’ll make an exception for two reasons:
- valuations have been so volatile lately and
- as you will see below, this deal may have implications for a bunch of other public companies.
The chart above shows Billtrust’s stock price from the time of the de-spac when it began trading as BTRS to today. EQT offered $9.50/share, or a total value of $1.7 billion for the company.
As EQT points out in its press release
The price per share represents more than a 64 percent premium above the closing share price of $5.77 on September 27, 2022, and more than a 76 percent premium above the trailing 90-day volume weighted average stock price for the period ended September 27, 2022.
(I’d also note that the premium was really a bit higher in that Reuters wrote that the company was considering strategic options in late July which moved the price up a bit.)
This price for Billtrust represents:
- a 10x multiple of FY2022 guided net revenue (net revenue excludes reimbursable costs, much of which is postage!)
- an 8x multiple of expected FY2023 net revenue (according to BAML’s analyst)
- a 12.5x multiple of FY2022 guided software and payments revenue (this excludes about 15% of BTRS revenue which is services and print/mail revenue)
- a 9.6x multiple of FY2023 estimated (by me) software and payments revenue
Billtrust expects negative 8-10% adjusted EBITDA margins in FY2022. The company is growing net revenue and software/payments revenue at about 30% this fiscal year, including acquisitions. Its guidance is that it will be free cash flow positive in FY2023, Adjusted EBITDA positive in Q2/Q3 FY 2023, and adjusted EBITDA positive for the full year FY 2024.
A Nice Return to Early Investors
The acquisition price may disappoint those who bought at the peak in the public markets, but all in all, it looks like a good deal for shareholders. The stock is trading at $9.30/share today, suggesting the market is not expecting a bidding war!
Congrats are due to Flint Lane and his team, as well as the investors. The company appears to have taken in $300M in capital over its life. And even the SPAC private placement investors made some money if I’m reading this dealroom.co chart right.
Implications for Other Public Companies
When I wrote about the correction in these stocks in late December 2021, I wrote about 11 stocks. Four of these eleven have now been taken private by PE or strategic investors: Tungsten, Basware, Bottomline, and now Billtrust. If you are interested, that leaves seven public companies remaining: Coupa, Avidxchange, MDF Commerce, Mercell, Rosslyn Data, Cass, and Sidetrade. And I was missing a couple of others I won’t name for fun!
Dear Readers: What other public companies in the market am I missing? And who is next?