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Thursday, Dec 8, 2022

Clearlake Capital to Buy Cornerstone OnDemand for $5.2 Billion

Santa Monica-based Cornerstone OnDemand Inc., a human resources management software company, has entered into an agreement to be acquired by Clearlake Capital Group in a transaction worth $5.2 billion.
Clearlake Capital, a private equity firm based in Santa Monica, is set to buy all outstanding shares of Cornerstone at $57.50 a share, representing a 31% premium on the company’s share price as of June 1, the companies announced Aug. 5.

“With this transaction, we plan to continue to pursue new software capabilities that advance our customers’ efforts to optimize workforce agility, transform skill development, deliver personalized, engaging growth experiences and align their organizations around a shared definition of success,” Phil Saunders, Cornerstone chief executive, said in a statement.

When the transaction is complete, Cornerstone OnDemand will become private and will be delisted from public markets.

Richard Haddrill, co-chairman at Cornerstone, said the announcement follows a monthslong “robust strategic review process” by Cornerstone in choosing from several interested financial partners.  

The company said it would benefit from the “operating capabilities, capital support and deep sector expertise” Clearlake offers.

The transaction, which was unanimously approved by Cornerstone’s board, is expected to be completed in the second half of 2021, subject to regulatory clearance and approval by a majority of Cornerstone stockholders.

Stockholders, including Clearlake, representing nearly 16% of the company’s outstanding shares have already agreed to vote in favor.

“With a compelling suite of market-leading (software-as-a-service) solutions, and history of product innovation, we believe Cornerstone is well-positioned in the growing and rapidly evolving talent management market,” Clearlake Partner Prashant Mehrotra and Principal Paul Huber said in a joint statement.

Founded in 1999, Cornerstone offers HR management software to connect people and teams using artificial intelligence. Cornerstone has more than 6,000 customers and 75 million users, and its software is available in 180 countries and 50 languages. The company went public in 2011.

Also on Aug. 5, Cornerstone announced its second quarter revenue for 2021 rose more than 16% year over year, to $214.3 million in 2021 from $184.4 million in 2020.

Revenue from its software subscription service represented the bulk of these earnings at $206.8 million, up nearly 17% compared to the same 2020 period. The company had a diluted net loss per share of 1 cent, due from the previous year’s loss of 19 cents per share.


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