Why Upland Software Is Acquiring Altify For $84 Million

By Dan Anderson ● October 10, 2019
  • Cloud-based enterprise work management software company Upland Software announced it is acquiring Altify for $84 million. These are the details.

Upland Software — a leader in cloud-based enterprise work management software — announced it acquired Altify. Altify is a leading customer revenue optimization (CRO) cloud solution for sales and the extended revenue teams.

Going forward, Altify will be a core platform of Upland’s Sales Optimization solution suite — which is the market’s first to combine opportunity and account management, sales process automation, customer reference management, and RFP and sales proposal automation. This platform is all supported by a robust content operations platform to ensure consistent messaging for high impact revenue teams. And this acquisition adds approximately $24 million in annualized revenues and will be immediately accretive to Upland’s Adjusted EBITDA per share.

“Built natively on Salesforce, Altify empowers revenue teams to build customer contacts, qualify deals, identify new and up-sell opportunities, and improve overall sales execution with guided selling,” said Upland Software founder, chairman, and CEO Jack McDonald. “This transaction is a core strategic addition, is immediately accretive to Adjusted EBITDA per share, and takes Upland to a $259 million annualized revenue run rate and a $99 million annualized Adjusted EBITDA run rate. Our acquisition pipeline is robust, and we are actively pursuing additional opportunities to build out our solution suites.”

Customer Revenue Optimization (CRO) is considered a new cloud solution category that automates the selling process, defining a set of actions for sales reps and managers to win deals, grow accounts, and maximize revenue for new business as well as upsell, cross-sell, and renewals management. And CRO enables salespeople and the extended revenue team to take a strategic approach to account planning so that they no longer miss a critical part of a revenue opportunity.

With the acquisition of Altify, Upland can now offer CRO along with its Qvidian RFP and sales proposal automation solution, RO Innovation customer reference management solution, and the Kapost B2B content operations platform.

“We are thrilled to welcome Altify’s customers and team members to Upland,” added Sean Nathaniel, Upland’s chief technology officer and executive vice president of Workflow Automation Solutions. “Altify is a leader in the customer revenue optimization category, combining a deep understanding of sales strategy and best practices, sales methodology, and applications with artificial intelligence to help drive sales.”

The terms of the deal were disclosed. Upland is paying $84 million in cash at closing. And Upland expects the acquisition to generate annual revenue of approximately $24 million, of which $22 million is recurring and is subject to reductions for a deferred revenue discount as a result of GAAP purchase accounting, estimated as $2 million for the remainder of 2019 based on a preliminary purchase price allocation and valuation of acquired deferred revenue. This acquisition is within 

Upland’s target price range of 5-8x pro forma Adjusted EBITDA. And Upland expects it to generate at least $10.8 million in Adjusted EBITDA annually once fully integrated. This acquisition will be immediately accretive to Upland’s Adjusted EBITDA per share.

In conjunction with this acquisition, $59 million was drawn on Upland’s revolving credit facility and it is taking Upland’s gross debt outstanding to $409 million. And with approximately $56 million of cash on-hand, Upland’s net debt is now approximately $353 million. The current terms of Upland’s credit facility permit the company to issue at least $100 million of additional debt under the facility. The facility will also permit Upland to incur additional debt as Adjusted EBITDA continues to grow.

For the full year ending December 31, 2019, Upland is expecting a reported total revenue to be between $217.3 and $221.3 million, including subscription and support revenue between $202.0 and $205.2 million for growth in recurring revenue of 49% at the mid-point over the year ended December 31, 2018. And the adjusted EBITDA is expected to be between $80.5 and $82.5 million for an Adjusted EBITDA margin of roughly 37% at the midpoint, representing growth of 53% at the mid-point over the year ended December 31, 2018. And the transaction will be immediately accretive to Upland’s Adjusted EBITDA per share.

Piper Jaffray had acted as exclusive financial advisor to Altify.