Ancora Holdings Group, an investor in software maker Everbridge, is pressuring the Massachusetts software company to explore strategic alternatives including a sale of the firm, claiming that it is underperforming under current management.
Cleveland-based investment firm Ancora, which owns about 4% of the software firm, said it believes Everbridge is “dramatically undervalued at current stock prices, and a sale to a well-capitalized acquirer could deliver more than $70 per share, or a more than 90% premium, for shareholders based on recent valuation multiples for both public and private company peers.” The current Everbridge stock price is around $40 per share.
Everbridge offers a comprehensive critical event management (CEM) software and platform, with the insurance industry among its customers. In 2021 it announced collaborations with insurance brokerage firms Brown & Brown and Howden to combine public safety technology with property/casualty insurance and parametric insurance offerings.
But Ancora maintains that the company is failing to leverage its advantages that include multiple product offerings and high incremental gross margins. It says, the brand is synonymous with being the “gold standard” for CEM.
“While the markets for software and information technology have enjoyed tremendous returns over the past several years, Everbridge has lagged with lackluster performance,” Ancora executives said in a letter to the Everbridge board.
Everbridge responded that it will review Ancora’s perspectives as it does those of all shareholders.
Everbridge added that its board and management team recently undertook a “comprehensive review” of the firm’s strategy and operations and as a result the company is pausing material new mergers and acquisitions, focusing on integrating its existing businesses and pursuing product simplification.
“We are confident that the actions we are taking today will help Everbridge deliver unmatched solutions to our customers, position our business to drive attractive, sustainable growth with improved profitability, and generate significant value for our shareholders,” Everbridge said in its statement.
Ancora blames what it calls the underperformance on “ineffective leadership and a shocking amount of turnover among senior executives.” It said six of 13 employees that were part of the management team in 2018 are no longer with the firm and the most recent chief executive officer, David Meredith, left after only a few years at the company.
Patrick Brickley and Vernon Irvin are serving as interim co-CEOs. Everbridge said it is conducting a search for a new chief executive officer.
Ancora said it believes the issues Everbridge is facing “are self-inflicted due to incompetent leadership that has failed to execute” and the issues can best be solved by a new team at the helm. Everbridge is “dramatically undervalued” at current share prices and represents an attractive acquisition target to both strategic and financial buyers, according to the letter.
“We believe that, operated by a capable team, Everbridge will be able to rectify its current issues and recapture a trajectory of durable growth,” Ancora stated in its letter.
Everbridge released its full 2021 results last month, citing total revenue of $368.4 million, an increase of 36% over 2020. It reported an operating loss of $76.2 million (compared to a loss of $72.2 million for 2020) and a net loss of $94.8 million (compared to a loss of $93.4 million for 2020).
Everbridge ended 2021with 6,135 global customers, up from 5,613 in 2020.
