Published on 08/26/2022
P10, Inc. (NYSE: PX), a provider of private markets solutions, has entered into a purchase and sale agreement to acquire, through its subsidiary, P10 Intermediate Holdings LLC, all membership interests ongoing from Westech Investment Advisors LLC, a California Limited Liability Company (WTI). Closing of the transaction is expected to occur in the fourth quarter of 2022, subject to customary closing conditions.
As a venture capital debt pioneer, WTI has deployed $7.8 billion in loan commitments to more than 1,400 venture-backed companies since its inception in 1980. Many listed U.S. technology companies in the stock market, representing more than $1 trillion in global market capitalization, counts the lender and partner WTI.
Overview of transactions
Upon closing, P10 will acquire 100% of the outstanding equity interests in WTI, the management company that receives management fees from all active WTI funds, in exchange for $97,000,008 in cash and 3,916,666 shares. member of P10 Intermediate Holdings, LLC. which may be exchanged for 3,916,666 P10 ordinary shares, subject to the applicable restriction periods. In addition, the purchase agreement includes additional earn-outs as EBITDA grows, with a total of US$70 million available in earn-out payments, in cash or common stock. P10, if EBITDA reaches US$25 million. The compensation hurdles are US$20 million, US$22.5 million and US$25 million EBITDA.
P10 intends to use available cash and borrowings under its credit agreement to fund the cash portion of the purchase price.
In line with the P10 approach to long-term alignment, WTI employees will retain 100% of the carried interest generated by WTI funds. In addition, WTI’s current management team will continue to manage day-to-day operations and oversee all investment decisions with no planned change in investment strategy. Upon closing of the transaction, P10 will grant a total of four million stock options to acquire common stock of P10 to WTI employees. Consistent with current P10 option grants, stock options will have a conditional vesting period of five years to encourage long-term retention and firm performance.
Colchester Partners LLC acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to WTI in connection with the transaction. Gibson, Dunn & Crutcher LLP served as legal counsel to P10.