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April 4, 2022
Ancora Holdings Group has urged the board of directors of Everbridge to evaluate sale opportunities and engage with a broad set of potential buyers. Everbridge, the critical event management provider that does business in the channel, is dramatically undervalued at its current share price, said executives at Ancora, which is a significant shareholder of Everbridge.
A well-capitalized acquirer could deliver more than $70 per share of Everbridge for shareholders. This is based on recent valuation multiples for both public and private company peers as well as recent software transactions, officials said.
Fredrick DiSanto is chairman and CEO of Ancora. James Chadwick is president of Ancora Alternatives.
Ancora’s Fredrick DiSanto
“We believe multiple financial sponsors have interest in pursuing an acquisition of Everbridge,” they said. “We intend to do everything in our power to hold the incumbents accountable if they do not pursue a value-maximizing sale.”
The executives’ comments were spurred when a recent financial sponsor told Everbridge that they were interested in pursuing an acquisition. The sponsor received a “tepid response” from Everbridge. DiSanto and Chadwick said they found it to be “unacceptable” by the board.
Their concerns follow up a letter issued in March in which the executives urged Everbridge’s board to explore strategic alternatives.
“We were first attracted to Everbridge because of its leading and dominant share of a large and still-growing market. As the market leader in critical event management (“CEM”), we admire Everbridge’s mission to keep people safe and businesses running. The need for Everbridge’s technology offering has never been more important now that natural disasters, terrorism and cyber threats are on the rise,” DiSanto and Chadwick wrote.
Ancora’s James Chadwick
They added: “Despite these advantages and tailwinds, we believe the current board and management team have failed to effectively manage the company’s business. They’ve also failed to execute on the company’s opportunities for growth and deliver value for shareholders. While the markets for software and information technology have enjoyed tremendous returns over the past several years, Everbridge has lagged with lackluster performance.”
DiSanto and Chadwick said they believe this underperformance is the result of ineffective leadership and significant turnover among senior executives. Most notably, former company CEO David Meredith left after a few short years with Everbridge.
When it comes to M&A, the letter’s authors said it was an early strength of the Everbridge operating model. However, it has become increasingly expensive and less focused in recent years. Everbridge appears to have chased acquisition targets at increasing valuations, they said. In 2021, the company spent more on M&A in a 12-month period than in its entire history as a public company to date.
Everbridge does not disclose contributions from M&A, obscuring that the company has been paying higher prices to acquire growth, Ancora said.
“This apparent deterioration in capital allocation discipline is extremely troubling. It suggests that the current leadership team is increasingly willing to gamble with shareholders’ resources,” they said.
The letter continues to outline DiSanto and Chadwick’s assessment of conflicts of interest at Everbridge.
Everbridge declined to comment about the most recent statement by the executives. Instead, Jeff Young, Everbridge’s vice president of corporate communications, directed Channel Futures to a letter published in Yahoo Finance. There, Everbridge officials said they do not comment on engagements with individual investors but will review Ancora’s perspectives.
“Given the recent change in leadership and developments in our business, the board and management team undertook a comprehensive review of our strategy and operations to ensure Everbridge is best positioned for the future. Going forward, we are taking action to improve on our strategic direction, go-to-market execution and efficiency,” officials said.
Among the actions underway, Everbridge is pursuing the following:
Pausing material new M&A and focusing on accelerating integration across our existing assets to provide for greater competitive differentiation, product simplification and lower cost.
Simplifying product offerings to focus on its four strategic critical event management solutions and drive higher productivity over time.
Leveraging “industry-leading” win rates to drive land-and-expand opportunities in the public warning market.
Conducting a search for a permanent CEO, considering both internal and external candidates.
DiSanto and Chadwick disagreed with the idea of searching for a CEO.
“We strongly oppose the hiring of a new CEO, which we believe will only serve as another distraction that introduces even more instability. Instead, we believe the board must urgently take action to close the valuation gap through a prospective sale of the company,” they said.
Claudia Adrien is a reporter for Channel Futures where she covers breaking news. Prior to Informa, she wrote about biosecurity and infectious disease for a national publication. She holds a degree in journalism from the University of Florida and resides in Tampa.
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