Analyst Note| Dan Romanoff, CPA |
Wide-moat Blackbaud announced that on Dec. 31 it acquired EVERFI, a cloud software provider that enables organizations to deliver social impact and digital education through its Impact-as-a-Service platform for customers’ ESG and corporate social responsibility (CSR) initiatives. The $750 million deal consists of $450 million in cash and new borrowings under the firm's credit facility and $300 million in stock, or approximately 3.8 million shares. The purchase price reflects the largest deal Blackbaud has undertaken at 20% of its pre-deal market cap, but we think management is up to the task to properly integrate EVERFI. Blackbaud also reiterated previous guidance for full-year 2021 for the standalone entity. We like the deal from almost every angle. Our first model pass has revenue benefits more than offsetting margin dilution in the near term, and we are thus maintaining our fair value estimate of $85 for now. We expect to make adjustments as formal guidance for the combined company is provided on Blackbaud's fourth-quarter earnings call.