General Atlantic is exploring the sale of payments software vendor EngageSmart, just 2 years after IPO

Private equity firm General Atlantic LLC is currently exploring options for the sale of EngageSmart, a payments software vendor with a market value of $3.2 billion, according to an exclusive report from Reuters. The news of the potential sale comes just two years after EngageSmart had a successful debut on the New York Stock Exchange, where it raised $378 million in its initial public offering (IPO).

Sources familiar with the ongoing discussions told Reuters that investment banks Goldman Sachs Group Inc and Evercore Inc are actively involved in assisting EngageSmart with the sale process, which is still in its early stages. However, they cautioned that no deal is guaranteed, and General Atlantic, the majority owner of EngageSmart with a 54% stake, may choose to gradually divest its holdings in the stock market.

Both General Atlantic and Goldman Sachs declined to comment on the matter. EngageSmart and Evercore did not respond to requests for comment.

EngageSmart’s software streamlines various customer interactions, including bill payments and transitioning to paperless processes, catering to clients across sectors such as health and wellness, government, utilities, and financial services. In August, the Braintree, Massachusetts-based company reported a 28% year-on-year increase in second-quarter revenue, totaling $94.4 million, driven by rising demand from corporate clients. It also posted $19.4 million in adjusted earnings before interest, taxes, depreciation, and amortization, up from $12 million the previous year.

Despite these positive figures, investors have expressed concerns about the potential effects of a slowdown in consumer spending on EngageSmart’s business. Over the past 12 months, the company’s shares have experienced a nearly 14% decline, lagging behind the 39% increase in the S&P 500 Application Software index.

General Atlantic initially acquired a majority stake in the company, formerly known as Invoice Cloud, back in 2018. Summit Partners, a private equity firm that was already an investor in EngageSmart, retains an approximate 15% stake in the company.

Founded on February 17, 2008, the Braintree, Massachusetts-based EngageSmart provides software solutions for simplifying customer interactions. The software vendor offers a range of services to help businesses and organizations streamline their customer engagement processes.

EngageSmart’s software enables customers to perform tasks such as bill payments and transition to paperless transactions, making it easier for companies to interact with their clients. The company serves a diverse clientele across various sectors, including health and wellness, government, utilities, and financial services.