Corcentric, a provider of payments, accounts payable and accounts receivable technology to enterprise and middle-market companies, and North Mountain Merger, a publicly traded special purpose acquisition company, entered into a definitive agreement to consummate a business combination that would result in Corcentric becoming a publicly listed company. Upon the closing of the transaction, the combined entity will be named Corcentric. The combined company is expected to have an implied pro forma enterprise value of approximately $1.2 billion at closing.
Founded in 1996, Corcentric provides B2B commerce solutions for enterprise and middle-market businesses. It delivers its solutions through a combination of cloud-based software, payments and advisory services. Corcentric’s suite of solutions and its proprietary B2B payments network, which consists of more than 450,000 buyers and 1.4 million suppliers, processes more than $100 billion in transaction volume annually.
Following the closing of the transaction, Corcentric’s executive management team will continue to be led by founder and CEO Douglas Clark and president and chief operating officer Matthew Clark. Thomas Sabol will serve as CFO and Mark Joyce will serve as the company’s executive vice president and chief accounting officer.
“We are immensely proud of Corcentric’s accomplishments since our founding 25 years ago, and we are excited to lead the next stage of development alongside the North Mountain team,” Clark said. “We believe there is significant runway for growth opportunities within our existing customer base as well as through untapped opportunities, such as new customer wins, new product innovation, international expansion and strategic acquisitions.”
“Corcentric’s ability to demonstrate consistent growth and high levels of profitability represents an exciting investment opportunity,” Chuck Bernicker, CEO of North Mountain Merger, said. “Doug and his team have developed a leading B2B commerce platform focused on transforming how businesses purchase, pay and get paid. We look forward to partnering with Corcentric’s management team at this exciting inflection point in the company’s growth.”
Transaction Overview
The transaction implies a pro forma enterprise value of the combined company of approximately $1.2 billion, representing an 8.1x multiple to 2022 expected adjusted revenue of $149 million. The transaction is expected to deliver approximately $182 million in gross proceeds, comprising North Mountain Merger’s approximately $132 million of cash held in trust (assuming no redemptions) and $50 million of fully committed PIPE financing from anchor investors, including Wellington Management and Millais Limited, an affiliate of the sponsor.
Under the terms of the transaction, Corcentric’s existing shareholders will convert their ownership stakes into equity of the combined company and are expected to own approximately 81% of the post-combination company immediately following the closing of the transaction. Bregal Sagemount, a growth equity firm, will continue as a shareholder of Corcentric. In addition, existing Corcentric equity holders have the potential to receive an earnout of additional shares of common stock of the combined company if certain stock price targets are met as set forth in the definitive merger agreement.
The boards of directors of Corcentric and North Mountain Merger unanimously approved the transaction, which is expected to close Q2/22 and which will require the approval of the stockholders of both Corcentric and North Mountain Merger. The transaction is also subject to other customary closing conditions, including the receipt of requisite regulatory approvals.
J.P. Morgan Securities is acting as financial advisor and capital markets advisor, William Blair is acting as financial advisor and Kirkland & Ellis is acting as legal counsel to Corcentric.
Citi is acting as capital markets advisor and Paul, Weiss, Rifkind, Wharton & Garrison is acting as legal counsel to North Mountain Merger.
J.P. Morgan Securities and Citi are acting as lead placement agents to North Mountain Merger on the PIPE financing, while William Blair is acting as co-placement agent to North Mountain Merger on the PIPE financing. Mayer Brown is acting as legal counsel to the placement agents with respect to the PIPE financing.
