Avid to be acquired by private equity firm STG for $1.4 billion

News

Avid has announced that it will be acquired by the private equity firm Symphony Technology Group (STG) in an all-cash transaction that values Avid at $1.4 billion, inclusive of Avid’s net debt. Avid, the Burlington, Mass.-based company that makes Sibelius, Pro Tools, Media Composer, and other products for the audio, video, and media industries, is currently a publicly-held company trading on the Nasdaq stock exchange.

According to the press release jointly released by Avid and STG, Avid stockholders will receive $27.05 in cash for each share of Avid common stock. Avid closed at $26.55 per share on August 9, 2023, the business day on which the deal was announced. Avid’s largest current shareholder is Impactive Capital, which first disclosed a stake in Avid in September 2019 and holds a seat on Avid’s board of directors.

The transaction is expected to close during the fourth quarter of 2023. Upon completion of the transaction, Avid will become a privately-held company, and its stock will no longer be traded on Nasdaq.

Speculation around the sale of Avid began in May of this year, when Reuters reported that, according to its sources, Avid was working with Goldman Sachs on a potential sale and was seeking binding offers from suitors. Chatter intensified last week as Reuters reported that STG and another firm, Francisco Partners, were vying to secure a deal with Avid.

Avid and STG made reference this speculation in its press release, noting that “The cash purchase price represents a premium of 32.1% over the Company’s unaffected closing share price on May 23, 2023, the last full trading day prior to media speculation regarding a potential sale of the Company.”

However, for 2023, Avid has underperformed the Nasdaq Composite index, staying essentially flat despite all of its gyrations, while the Nasdaq has been on a tear, appreciating more than 32% since the beginning of the year.

Avid stock price in 2023 compared to the Nasdaq Composite Index; AVID in dark blue (Yahoo! Finance)

Still, a longer-term investor in Avid would have reason to celebrate, depending on timing; over the past five years, Avid’s stock price has easily tripled, rising 379% compared to 77% for the Nasdaq index during that time.

Avid stock price for the past 5 years compared to the Nasdaq Composite Index; AVID in dark blue (Yahoo! Finance)

STG is no stranger to technology companies. It says that its focus is to “find, build, and scale mid-market software and software-enabled tech services businesses.” In March of this year, it acquired Momentive, the maker of SurveyMonkey, in a similarly-sized deal valued at $1.5 billion.

The acquisition represents something of a turnaround for Avid, which has itself acquired many companies, including Sibelius Software for $23 million in 2006, over the course of its 35-year history. In the past decade, though, the company had endured financial and management turmoil before stabilizing in recent years. In February 2014, the company was delisted from Nasdaq, which required the company to restate its financial statements and regain compliance with its SEC filing requirements, which it ultimately completed in September 2014, allowing the stock to be relisted on Nasdaq in December 2014.

Then, in February 2018, after an internal investigation conducted with the assistance of external legal counsel, Avid fired CEO Louis Hernandez, Jr, “due to violations of Company policies related to workplace conduct”, and replaced him with Jeff Rosica, who had been with the company as its senior vice president, chief sales and marketing officer.

Rosica has remained as Avid’s CEO and president since that time, leading the company through the COVID pandemic, and has generally enjoyed a successful tenure; since his appointment in February 2018, the stock has more than quadrupled, rising 454% compared to 90% for the broader Nasdaq Composite index.

In yesterday’s press release announcing the STG acquisition, Rosica said, “We are pleased to announce this transaction with STG, who share our conviction and excitement in delivering innovative technology solutions to address our customers’ creative and business needs. STG’s expertise in the technology sector and significant financial and strategic resources will help accelerate the achievement of our strategic vision, building on the momentum of our successful transformation achieved over the past several years. This transaction represents the start of an exciting new chapter for Avid, our customers, our partners and our team members and is a testament to the importance of Avid and our solutions in powering the media and entertainment industry.”

Known in the wider world more for products such as Pro Tools, Media Composer, and other media storage and hardware products, Avid is, of course, most familiar to Scoring Notes readers as being responsible for Sibelius, the music notation software. Although Sibelius is often ignored in general media coverage of Avid, Sibelius represents an important — and profitable — piece of the company, and has delivered consistent updates over the past several years. Sibelius moved to a more incremental release approach around 2016 and in 2018 began identifying versions according to the year and month in which they were released, instead of by version number. Among its most notable launches was a version for iPad in 2021, which soon became available on iOS, known as Sibelius for Mobile.

The most current Sibelius version is 2023.6, released in June 2023, featuring a nascent automatic chord symbol completion model based on built-in AI technology and trained on several data sets of classical music.

Comments

  1. Nate Tronerud

    One can only hope that by taking it private and removing the constant need for endless stock returns, Avid can become a friendlier and more customer-focused, rather than investor-focused, company.

    1. Bob

      “Private equity” is the euphemism for what used to be called “corporate raiders.” It’s very different from simple private ownership by parties interested in making the best of a company.

      I hope I’m wrong, but I don’t see how anything good can come of this.

      Overview of private equity on Amanpour & Company – “Private Equity Runs – and Wrecks – America”: https://www.youtube.com/watch?v=AjSM4x1iAcc

      1. Nate Tronerud

        Thanks. Can only hope for the best I suppose (and not immediate liquidation).

        1. Bob

          A friend who knows much more about business than I said they’ll likely consider whether the products are worth more as separate entities. If so, they’ll be sold, but it seems unlikely that Sibelius will be shut down, as it’s profitable (as Philip points out).

          One of the ways PE seeks to increase profits is by “streamlining”, which usually means firing people and/or lowering wages and/or outsourcing jobs to lower-wage countries (a.k.a., labor arbitrage).

          I imagine that with AI being the latest tech fad, they’ll try to replace support people with chat bots (if they haven’t already). That will no doubt suck.

          I wouldn’t be surprised if the subscription rates increase too.

          In the race to maximize profit growth above all else, customers are probably the least of their concerns. I imagine they assume that customers will put up with a lot of mis-treatment because changing platforms is a pain.

          I do all my new notation projects in Dorico, and have converted most (if not all) my Sibelius projects to musicxml and PDF but I still have a Sibelius license “just in case”. I use it just a couple of times a year. Hopefully, when my latest 3-year subscription ends, I won’t feel the need to renew.

  2. SIMON COOK

    Any thoughts on how this change may affect Sibelius users?

  3. Engela Fullard

    I am also wondering how this will affect Sibelius, and if the ongoing issues with the Sibelius licensing/activation will eventually be resolved.

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