SumTotal
Image from SumTotal’s Facebook page

Cornerstone OnDemand, a portfolio company of private equity firm Clearlake Capital Group, has bought learning management software provider SumTotal from Skillsoft for $200 million in a cash transaction.

Based in Gainesville, Florida, SumTotal provides talent acquisition, human capital, onboarding, learning management and talent management software for highly regulated industries, including technology, airlines, financial services, healthcare, manufacturing, and pharmaceuticals.

Following the close of the transaction, Richard Walker, chief corporate strategy and development officer and president of SumTotal, will become Skillsoft’s chief corporate strategy and development officer.

In fiscal year 2022 SumTotal generated $120 million in revenue. Adjusted EBITDA was $37 million excluding corporate allocations and $25 million including them. The company is expected to be approximately flat across those metrics in fiscal year 2023, which would deliver an enterprise value multiple of approximately 8x adjusted EBITDA including corporate allocations.

Skillsoft stated that the deal is expected to be immediately accretive to its bookings and revenue growth at closing, each by approximately one percentage point.

Skillsoft intends to use a portion of the net proceeds from the transaction to partially repay its senior secured term loan B facility. The company expects pro forma fiscal year 2022 net leverage to be approximately 3.7x.

Skillsoft’s chief executive Jeffrey Tarr said: “Through the divestiture of SumTotal, we are aligning and simplifying Skillsoft’s portfolio to serve our customers and focus our business on the best opportunities for profitable growth.”

Centerview Partners was the financial advisor to Cornerstone and Clearlake, while Sidley Austin served as legal counsel. PJT Partners was the exclusive financial advisor to Skillsoft, and Weil, Gotshal & Manges was the company’s legal counsel.

The transaction is expected to close in the second half of the year.

Date Published: 14 June 2022

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