Q4 can drive substantial long term shareholder value as a standalone public company.
FINSIGHT is committed to being an engaged shareholder and will consider all options to ensure a standalone Q4 drives value for all shareholders.
FINSIGHT urges Fellow Shareholders to vote AGAINST the proposed Arrangement today.
The full text of the letter follows:
Dear Fellow Shareholders:
By now, we hope you have reviewed our
The Special Committee of the Board (the “Special Committee”) subsequently responded to our press release, in a letter dated
In this letter, FINSIGHT seeks to reiterate our position and analysis, and address some of the assertions made by the Special Committee:
I. In their
- Ten Coves and senior management determined from the outset (
June 2023 ) that it would only entertain offers that enabled Ten Coves to roll. We believe Ten Coves knew that this self-serving structural impediment would significantly impair the universe of strategics and sponsors willing to acquire the Company (many of whom would prefer a clean capital structure or fulsome acquisition) and it was a key motive driving the lack of buyer outreach. - On
July 4 , Sumeru executed an NDA. Eight days later, onJuly 12 , the Special Committee “determined that it would engage in a preliminary price exploration exercise with the Potential Counterparties… and defer any formal sale process until an indication of interest had been received from at least one.” Here, the Special Committee established a clear criterion to initiate a “formal sale process.” - On
July 26 , Sumeru submitted a non-binding indication of interest. Yet, nine days later, onAugust 4 , the Special Committee “noted the Board’s views on the need for certainty to secure an offer within an acceptable range and the risk of one of more Potential Counterparties withdrawing its proposal as a result of the Company commencing a broader sale process.”
Fellow shareholders, the above events and quotes are drawn directly from the Company’s MIC. We believe the Special Committee understood and more importantly, acknowledged that they were not engaging in a “formal sale process” by relying solely on indications of three of the four inbound sponsors and that the process therefore cannot meet the standard of being “robust.” Moreover, the Special Committee refused to address or explain why Sumeru was given over 60 days after submitting its
II. In its
This is nonsensical and disingenuous. At what point were IPO investors and shareholders told they were investing in an acquisition vehicle rather than a pre-eminent software solutions provider for public companies? The Company itself doesn’t believe this, as evidenced by the over
Further highlighting the fallacy of the Special Committee’s statement, below are excerpts taken verbatim from page 39 of Q4’s
- “We believe that any public company can benefit from subscribing to the Q4 platform. We estimate that there are approximately 41,500 public companies globally1 and, based on the annual price point of our complete corporate platform, we believe this represents a global market opportunity of approximately
US$13 billion annually.” - “We currently offer certain products in our platform for the sell-side to facilitate the functions of their corporate access teams, including virtual conferencing services, with near-term plans to expand to deal management and research services. We believe that there is a significant need in the global market for these services as we estimate there are approximately 8,000 sell-side firms2, approximately 1,000 annual sell-side investor conferences and approximately 24,000 public offerings1 annually. Based on the cost of our solutions and what we believe the market price is for our upcoming sell-side focused products, we believe the global sell-side opportunity represents an annual market of approximately
US$5 billion .” - “We also sell access to our platform to the buy-side and, in the near-term, plan to add additional products to our platform focused on the buy-side, including virtual meeting management and research services. Globally, there are approximately 25,000 buy-side firms2 and, based on the average cost of our buy-side focused solutions, we estimate a global buy-side market opportunity of approximately
US$2 billion annually.”
Fellow shareholders, the Special Committee is either purposely misleading Non-Rolling Shareholders or lacks a fundamental understanding of Q4’s business. Neither are acceptable positions for the directors who purportedly represented the interests of Non-Rolling Shareholders in these negotiations.
III. We are confident that in the event Non-Rolling Shareholders defeat the Arrangement, the Q4 Board and management team will heed the will of shareholders, take action on our recommendations and execute a comprehensive repositioning of Q4.
We have confidence that with the right priorities and accountability in place, Q4 management can drive substantial medium and long-term shareholder value as a standalone public company. With the recent restructuring complete, we reiterate that Q4 management should refocus the Company on organic growth. As articulated in our
- Focus on driving free cashflow by further rationalizing SG&A and reducing R&D, which we believe would instantly be accretive to its valuation. Given the business is near break-even, returning SG&A and R&D to be in line with 2020 levels could generate over
$20 million in EBITDA in 2024. Today, the Company supports less than 12% more customers than it did in 2020, while SG&A and R&D has increased 95%. - Monetize the over
$30 million in R&D expenditures and data and increase prices. - Drive initiatives to begin utilizing Q4’s vast set of proprietary data.
- Consider establishing sales channels within the investment banks, comparable to FINSIGHT and virtual data room providers, where it can potentially garner multiples more average revenue per customer (ARPC) than it does selling through budget constrained IR departments.
- Consider moving forward with a dual-exchange listing in the US, as originally planned, which could widen the Company’s potential investor base, improve trading volumes, and unlock liquidity.
Moreover, senior management should:
- Immediately increase pricing of its core web hosting and webinar services to be more representative of the value it provides its clients. Commoditized virtual data room and b-roll video media companies often command 5-10 times more fees than Q4 on the same IPO despite doing a fraction of the work.
- Recognize that a strong culture is predicated on a physically present team driven by a shared vision. As such, it should immediately end its company-wide ‘work-from-home’ policy that we believe is driving significant employee disengagement, attrition and turnover.
We believe the result of adopting these steps, will be a more focused and more operationally efficient Company that is better positioned to capitalize on its irreplicable market share, vast troves of proprietary data and abundance of cross-sale opportunities.
In 12-24 months, we would welcome the exploration of strategic alternatives provided senior management and the Board committed to an unconflicted and comprehensive sale process, overseen by a Special Committee that thoroughly advocates for the interests of all shareholders.
However, and let us be clear, if following a no-vote the Board does not immediately demonstrate that it is prepared to put the Company on a new course – FINSIGHT will consider all its rights and remedies as a shareholder to bring about the changes necessary to unlock Q4’s full potential.
IV. Finally, to address the question put to us by the Special Committee in its letter and purportedly shared by other shareholders regarding our motivations, FINSIGHT’s interest in Q4 is purely financial. The Company can and should be sold for 2-3x the current Arrangement price.
As the Special Committee itself observed, FINSIGHT is not a traditional investor. We are sophisticated operators of a capital markets technology business that is an upstream service provider – not a competitor to Q4. We understand its business, its ecosystem and all the stakeholders involved. We are happily prepared to forgo a quick return on our investment because of the magnitude of the upside opportunity available for all shareholders if the Company conducted a proper sale process. We’ve put millions of dollars of our own capital behind this and on principle, we will not quietly accept a significantly impaired outcome driven entirely by the decisions of conflicted insiders and fiduciaries, and nor should you.
Fellow shareholders, you do not have to accept this opportunistic transaction. Vote it down.
The time for action has arrived. FINSIGHT encourages you to VOTE AGAINST the Arrangement today. If you have already voted “For” the Arrangement, you can change your vote online to “AGAINST” using the control number and website that was printed on your proxy or voting instruction form.
Shareholders with questions about their vote can contact
Sincerely,
CEO,
About
Advisors
Shareholder Contact
1-800-530-5189
(416) 751-2066
info@carsonproxy.com
Media Contact
(416) 305-1459
FINSIGHT@gagnierfc.com
Disclaimer for Forward-Looking Information
Certain information in this news release may constitute “forward-looking information” within the meaning of applicable securities legislation. Forward-looking statements and information generally can be identified by the use of forward-looking terminology such as “outlook,” “objective,” “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “plans,” “continue,” or similar expressions suggesting future outcomes or events. Forward-looking information in this news release may include, but is not limited to, statements of FINSIGHT regarding how FINSIGHT intends to exercise its legal rights as a shareholder of the Company.
Although FINSIGHT believes that the expectations reflected in any such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. Except as required by law, FINSIGHT does not intend to update these forward-looking statements.
Information in Support of Public Broadcast Solicitation
The following information is provided in accordance with the corporate and securities laws of the Province of
FINSIGHT has filed this press release containing the information required by section 9.2(4)(c) of NI 51-102 on Q4’s company profile on SEDAR+ at www.sedarplus.ca.
A Q4 shareholder who has given a proxy has the power to revoke it by depositing an instrument in writing signed by the Q4 shareholder or by the Q4 shareholder’s attorney, who is authorized in writing, or if the Q4 shareholder is a corporation, by an officer, or attorney authorized in writing, or by transmitting, by telephonic or electronic means, a revocation signed by electronic signature by or on behalf of the Q4 shareholder or by the Q4 shareholder’s attorney, who is authorized in writing, and deposited with
FINSIGHT is a shareholder of Q4. With the exception of the foregoing, to the knowledge of FINSIGHT, neither FINSIGHT nor any associates or affiliates of FINSIGHT, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in the Proposed Transaction or any other matter to be acted upon at the Meeting.
1 https://investors.q4inc.com/events-presentations/default.aspx
Source: Finsight
2024 GlobeNewswire, Inc., source