MINDBODY (MB) investors got a nice early Christmas present today as the company has agreed to be acquired by a private equity firm. Vista Equity Partners is paying $36.50 per share in cash, which is a 68% premium to MB's closing price on Friday. The stock has been languishing in recent months, falling from $40 in early October to around $22 at Friday's close. So investors are likely pleased with such a strong offer.
MINDBODY is a provider of cloud-based business management software for the wellness services industry. Its software and payments platform helps wellness business owners operate their businesses. A typical example might be a health club. The MindBody app would allow the health club to allow its customers to check-in when they arrive or perhaps book/pay for a yoga class. Its app also integrates with treadmills so people can track their calorie burns. It also helps clients manage/schedule their employees, handle payroll, provide payment processing services for gym members, provide analytics etc.
In addition to health clubs, other typical customers are spas or salons. In fact, MB acquired Booker Software, a booking/payment platform for salons and spas, for $150 mln in cash in April 2018. The acquisition of Booker added approximately 10,000 salons and spas to the MINDBODY marketplace. Booker also owns Frederick, a fast-growing, automated marketing software for wellness businesses.
This followed the 1Q18 acquisition of FitMetrix, which provides performance tracking integrations with fitness equipment and wearables. Another recent acquisition was Lymber Wellness, an early-stage tech company specializing in yield management technology for class and appointment-based businesses. Lymber's technology enables business owners to set dynamic pricing parameters for class and appointment sessions. What this means is that this technology identifies open class and appointment inventory, and automatically adjusts session prices in real time to match supply and demand. This is a highly sought-after technology by fitness clubs and salons.
The company has been struggling a bit lately. When it reported Q3 results in early November, it guided Q4 revenue below market expectations. MB conceded that it has been facing significant operating challenges in the past two quarters. The combined effects of recent acquisitions, go-to-market reorganization and expanding consumer and partner initiatives, have made MINDBODY a considerably more complex business to operate than it was just six months ago. And the company did not meet its own growth expectations in Q2 and Q3. MB expects this to continue lagging a bit in Q4.
In sum, MB's journey as a public company looks to be pretty short. It made its IPO debut in June 2015 and now it's getting acquired three and a half years later. There is a pretty decent chance that MINDBODY could return to the public markets at some point. Perhaps Vista Equity will get the company back on track and spin them off in another IPO down the road. Time will tell. In the meantime, MB are getting a nice premium on the transaction.