DEFM14A 1 smartsheetdefm14a1142024.htm DEFM14A Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐Preliminary Proxy Statement
☐Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒Definitive Proxy Statement
☐Definitive Additional Materials
☐Soliciting Material Pursuant to §240.14a-12
Smartsheet Inc.
(Name of Registrant as Specified In Its Charter)
Not applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
☐No fee required.
☒Fee paid previously with preliminary materials.
☐Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.



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SMARTSHEET INC.
500 108th Ave NE, Suite 200
Bellevue, Washington 98004
November 4, 2024
Dear Smartsheet Inc. Shareholder:
You are cordially invited to attend a special meeting of shareholders (which, together with any adjournments or postponements thereof, we refer to as the “Company Shareholders’ Meeting”) of Smartsheet Inc., a Washington corporation (which we refer to as “Smartsheet,” the “Company,” “we,” “us,” or “our”) to be held virtually via live webcast on December 9, 2024, at 10:00 a.m., Pacific Time (unless the Company Shareholders’ Meeting is adjourned or postponed).
You may attend the Company Shareholders’ Meeting virtually via the Internet at www.virtualshareholdermeeting.com/SMAR2024SM. Please note that you will not be able to attend the Company Shareholders’ Meeting physically in person. For purposes of attendance at the Company Shareholders’ Meeting, all references in the enclosed proxy statement to “attendance at the Company Shareholders’ Meeting” or “present at the Company Shareholders’ Meeting” mean virtually attending and present at the Company Shareholders’ Meeting. Formal notice of the Company Shareholders’ Meeting, a proxy statement, and a proxy card accompany this letter.
At the Company Shareholders’ Meeting, you will be asked to consider and vote on a proposal to approve and adopt the Agreement and Plan of Merger (which we refer to, as it may be amended from time to time, as the “Merger Agreement”), dated September 24, 2024, by and among Smartsheet, Einstein Parent, Inc., a Delaware corporation (which we refer to as “Parent”), and Einstein Merger Sub, Inc., a Washington corporation and a wholly owned subsidiary of Parent (which we refer to as “Merger Sub”) (we refer to such proposal as the “Merger Proposal”). Parent and Merger Sub are each affiliates of investment funds managed by affiliates of Blackstone Inc. (collectively, which we refer to as “Blackstone”), one of the world’s leading investment firms, investment funds managed by Vista Equity Partners Management, LLC (which we refer to as “Vista Equity Partners”), a leading private equity firm focused on investments in software, data and technology-enabled companies, and Platinum Falcon B 2018 RSC Limited (which we refer to as “Platinum Falcon”), an indirect wholly owned subsidiary of the Abu Dhabi Investment Authority (which we refer to as “ADIA”), will also be an indirect minority investor in Smartsheet. At the Company Shareholders’ Meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding advisory basis, certain compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger (as defined below) (we refer to such proposal as the “Compensation Proposal”). Finally, at the Company Shareholders’ Meeting, you will also be asked to consider and vote on a proposal to adjourn the Company Shareholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Shareholders’ Meeting (which we refer to as the “Adjournment Proposal”).
Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Smartsheet (which we refer to as the “Merger,” which, together with each of the other transactions contemplated by the Merger Agreement, we refer to as the “Transactions”), whereupon the separate corporate existence of Merger Sub shall cease, with Smartsheet surviving the Merger as a wholly owned subsidiary of Parent in accordance with the Washington Business Corporation Act (which we refer to as the “WBCA”). If you are a Smartsheet shareholder and the Merger is completed, each share of Smartsheet Class A Common Stock (which we refer to as the “common stock”), that you own as of immediately prior to the effective time of the Merger, will be automatically converted into the right to receive an amount in cash equal to $56.50 in cash (which we refer to as the “Merger Consideration”), without interest (except for shares owned by any shareholder who has properly exercised and perfected such shareholder’s demand for dissenters’ rights pursuant to Chapter 23B.13 of the WBCA and who has not effectively withdrawn or forfeited such holder’s dissenters’ rights).
Smartsheet’s board of directors (which we refer to as the “Board of Directors”), after careful consideration, including considering the factors more fully described in the enclosed proxy statement, has unanimously (i) determined that it is in the best interests of Smartsheet and the shareholders of Smartsheet, and declared it advisable, to enter into the Merger Agreement; (ii) approved the execution, delivery and performance of the Merger Agreement and the consummation of the Transactions, including the Merger, with Smartsheet surviving the Merger as a wholly owned subsidiary of Parent, in accordance with the WBCA; and (iii) subject to the provisions of the Merger Agreement, resolved to recommend that Smartsheet’s shareholders adopt the Merger Agreement and directed that such matter be submitted for consideration of Smartsheet’s shareholders at the Company Shareholders’ Meeting.
The Board of Directors unanimously recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.


The enclosed proxy statement provides detailed information about the Company Shareholders’ Meeting, the Merger Agreement, and the Merger. The enclosed proxy statement also includes a summary of certain terms of the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to the proxy statement (which includes a copy of the articles of incorporation of the surviving corporation in Exhibit A thereto). The proxy statement also describes the actions and determinations of the Board of Directors in connection with its evaluation of the Merger Agreement and the Merger. We encourage you to read the proxy statement and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information.
Whether or not you plan to attend the Company Shareholders’ Meeting virtually, please sign, date, and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone by following the instructions on the enclosed proxy card. If you attend the Company Shareholders’ Meeting and vote online during the meeting, your vote will revoke any proxy that you have previously submitted.
If you hold your shares of our common stock in “street name,” you should instruct your bank, broker, or other nominee how to vote your shares of our common stock in accordance with the voting instruction form that you will receive from your bank, broker, or other nominee. Your bank, broker, or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.
Your vote is very important, regardless of the number of shares of our common stock that you own. We cannot complete the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock.
If you have any questions or need assistance voting your shares of our common stock, please contact our Proxy Solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: +1 (877) 750-0510
Banks & Brokers May Call Collect: +1 (212) 750-5833
On behalf of the Board of Directors, we thank you for your support and appreciate your consideration of this matter.
Sincerely,
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Michael GregoireMark P. Mader
Chair of the Board
President, Chief Executive Officer, and Director
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger, the adoption of the Merger Agreement or any other transaction described in the accompanying proxy statement, or passed upon the adequacy or accuracy of the disclosure in the accompanying proxy statement. Any representation to the contrary is a criminal offense.
The accompanying proxy statement is dated November 4, 2024 and, together with the enclosed form of proxy card, is first being mailed on or about November 4, 2024.



SMARTSHEET INC.
500 108th Ave NE, Suite 200
Bellevue, Washington 98004
NOTICE OF SPECIAL COMPANY MEETING OF SHAREHOLDERS
TO BE HELD VIRTUALLY VIA THE INTERNET ON DECEMBER 9, 2024
Notice is hereby given that a special meeting of shareholders (including any adjournments or postponements thereof, which we refer to as the “Company Shareholders’ Meeting”) of Smartsheet Inc., a Washington corporation (which we refer to as “Smartsheet,” “the Company,” “we,” “us,” or “our”), will be held on December 9, 2024, at 10:00 a.m., Pacific Time (unless the Company Shareholders’ Meeting is adjourned or postponed). Smartsheet shareholders will be able to attend the Company Shareholders’ Meeting virtually via live webcast at www.virtualshareholdermeeting.com/SMAR2024SM. Please note that you will not be able to attend the Company Shareholders’ Meeting physically in person. For purposes of attendance at the Company Shareholders’ Meeting, all references in the enclosed proxy statement to “attendance at the Company Shareholders’ Meeting” or “present at the Company Shareholders’ Meeting” mean virtually attending and present at the Company Shareholders’ Meeting. The Company Shareholders’ Meeting is being held for the following purposes:
1.To consider and vote on the proposal to adopt the Agreement and Plan of Merger (which we refer to, as it may be amended from time to time, as the “Merger Agreement”), dated September 24, 2024, by and among Smartsheet, Einstein Parent, Inc., a Delaware corporation (which we refer to as “Parent”), and Einstein Merger Sub, Inc., a Washington corporation and a wholly owned subsidiary of Parent (which we refer to as “Merger Sub”). A summary of the terms of the Merger Agreement can be found starting on page 1 of the enclosed proxy statement. You are urged to read the summary in its entirety. A copy of the Merger Agreement is also attached as Annex A to this Notice. Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Smartsheet (which we refer to as the “Merger”), whereupon the separate corporate existence of Merger Sub shall cease, with Smartsheet surviving the Merger as a wholly owned subsidiary of Parent (we refer to this proposal as the “Merger Proposal”);
2.To consider and vote on the proposal to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger (we refer to this proposal as the “Compensation Proposal”); and
3.To consider and vote on a proposal to adjourn the Company Shareholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Shareholders’ Meeting (we refer to this proposal as the “Adjournment Proposal”).
Only Smartsheet shareholders of record as of the close of business on October 25, 2024 are entitled to notice of the Company Shareholders’ Meeting and to vote at the Company Shareholders’ Meeting or any adjournment, postponement or other delay thereof.
Your vote is very important, regardless of the number of shares of our common stock that you own. We cannot complete the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of Smartsheet’s common stock.
The Board of Directors unanimously recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
Whether or not you plan to attend the Company Shareholders’ Meeting virtually, please sign, date, and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone by following the instructions on the enclosed proxy card. If you are a shareholder of record, and you attend the Company Shareholders’ Meeting and vote online during the Company Shareholders’ Meeting, your vote will revoke any proxy that you have previously submitted. If you hold your shares of our common stock in “street name,” you should instruct your bank, broker, or other nominee how to vote your shares of our common stock in accordance with the voting instruction form that you will receive from your bank, broker, or other nominee. Your bank, broker, or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.
By the Order of the Board of Directors,
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Jolene Marshall
Chief Legal Officer and Secretary
Bellevue, Washington, USA
November 4, 2024


YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE COMPANY SHAREHOLDERS’ MEETING, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (i) BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED; (ii) OVER THE INTERNET; OR (iii) BY TELEPHONE. You may revoke your proxy or change your vote at any time before it is voted at the Company Shareholders’ Meeting.
If you hold your shares of our common stock in “street name,” you should instruct your bank, broker, or other nominee how to vote your shares of our common stock in accordance with the voting instruction form that you will receive from your bank, broker, or other nominee. Your bank, broker, or other nominee cannot vote on any of the proposals, including the Merger Proposal, without your instructions.
If you are a shareholder of record, voting online during the Company Shareholders’ Meeting will revoke any proxy that you previously submitted.
If you hold your shares of our common stock through a bank, broker, or other nominee, you must obtain a “legal proxy” in order to vote online at the Company Shareholders’ Meeting.
If you fail to (i) return your signed proxy card; (ii) grant your proxy electronically over the Internet or by telephone; or (iii) attend the Company Shareholders’ Meeting and vote online during the meeting, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the Company Shareholders’ Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Compensation Proposal and Adjournment Proposal.
We encourage you to read the accompanying proxy statement and its annexes, including all documents incorporated by reference into the accompanying proxy statement, carefully and in their entirety. If you have any questions concerning the Merger, the Company Shareholders’ Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of our common stock, please contact our Proxy Solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: +1 (877) 750-0510
Banks & Brokers May Call Collect: +1 (212) 750-5833


TABLE OF CONTENTS

Page







SUMMARY
This summary highlights selected information from this proxy statement related to the merger of Einstein Merger Sub, Inc. with and into Smartsheet Inc., which we refer to as the “Merger,” (which, together with each of the other transactions contemplated by the Merger Agreement, we refer to as the “Transactions”) and may not contain all of the information that is important to you. To understand the Merger more fully and for a more complete description of the legal terms of the Merger, you should carefully read and consider this entire proxy statement, the annexes to this proxy statement and the documents that we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.”
Except as otherwise specifically noted in this proxy statement, “Smartsheet,” the “Company,” “we,” “us,” or “our” and similar words refer to Smartsheet Inc., a Washington corporation, including, in certain cases, our subsidiaries.
Throughout this proxy statement, we refer to Einstein Parent, Inc., a Delaware corporation, as “Parent,” and Einstein Merger Sub, Inc., a Washington corporation and a wholly owned subsidiary of Parent, as “Merger Sub.”
In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated September 24, 2024, by and among Smartsheet, Parent and Merger Sub, as it may be amended from time to time, as the “Merger Agreement.” The Merger Agreement is attached as Annex A to this proxy statement. You should read and consider the Merger Agreement, which is the legal document that governs the Merger, carefully and in its entirety.
Parties Involved in the Merger
Smartsheet Inc.
Smartsheet, the enterprise work management platform, empowers organizations to innovate and achieve results quickly and securely at scale through effective collaboration and streamlined workflows. By uniting people, content, and work, Smartsheet provides powerful capabilities that revolutionize the way teams operate. Smartsheet makes outcomes reliable, keeps customer data safe, and ensures users are aligned, making it ideal for organizations seeking efficient, impactful collaborative work management.
Smartsheet’s Class A common stock (which we refer to as “common stock”) is listed on the New York Stock Exchange (which we refer to as “NYSE”) under the symbol “SMAR.” Smartsheet’s Class B common stock is not listed or traded on any stock exchange, and no shares of Class B common stock are outstanding.
For more information, please see the section of this proxy statement captioned “The Merger — Parties Involved in the Merger.”
Einstein Parent, Inc.
Parent was formed solely for the purpose of engaging in the Transactions. Parent has not engaged in any business activities other than as incidental to its formation and in connection with the Transactions and arranging of the equity financing and any potential debt financing in connection with the Merger. Parent is an affiliate of Blackstone and VEPF VIII (as such terms are defined below). Parent’s address is Four Embarcadero Center 20th Floor, San Francisco, CA 94111. For more information, please see the section of this proxy statement captioned “The Merger — Parties Involved in the Merger.”
Einstein Merger Sub, Inc.
Merger Sub is a wholly owned subsidiary of Parent and was formed solely for the purpose of engaging in the Transactions. Merger Sub has not engaged in any business activities other than as incidental to its formation and in
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connection with the Transactions and arranging of the equity financing and any potential debt financing in connection with the Merger. Upon completion of the Merger, Merger Sub will cease to exist and Smartsheet will continue as the surviving corporation of the Merger and as a wholly owned subsidiary of Parent. Merger Sub is an affiliate of Blackstone and VEPF VIII. Merger Sub’s address is Four Embarcadero Center, 20th Floor, San Francisco, CA 94111. For more information, please see the section of this proxy statement captioned “The Merger — Parties Involved in the Merger.”
Blackstone Inc.
Parent and Merger Sub are each affiliated with investment funds managed by affiliates of Blackstone Inc. (which we collectively refer to as “Blackstone”). In connection with the Transactions, Blackstone has committed to provide Parent, at or prior to the closing of the Merger (the “Closing”) with an aggregate cash amount of up to $2,105,000,000, which will be available, together with the other Equity Financing Commitments (as defined below), available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing to fund the aggregate Merger Consideration (including payments in respect of Smartsheet’s outstanding equity-based awards payable in connection with the Closing pursuant to the Merger Agreement) and to pay the fees and expenses required to be paid in connection with the Closing by Parent and Merger Sub as described further in this proxy statement under the caption “The Merger—Financing of the Merger; Damages Commitment.”
For more information, please see the section of this proxy statement captioned “The Merger — Parties Involved in the Merger.”
Vista Equity Partners Fund VIII, L.P.
Parent and Merger Sub are each affiliated with Vista Equity Partners Fund VIII, L.P. (which we refer to as “VEPF VIII” and collectively with Blackstone, the “Buyers”), and VEPF VIII is affiliated with Vista Equity Partners Management, LLC (which we refer to as “Vista Equity Partners”). In connection with the Transactions, VEPF VIII has committed to provide Parent, at or prior to the Closing with an aggregate cash amount of up to $1,753,000,000, which will be available, together with the other Equity Financing Commitments (as defined below), available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing to fund the aggregate Merger Consideration (including payments in respect of Smartsheet’s outstanding equity-based awards payable in connection with the Closing pursuant to the Merger Agreement) and to pay the fees and expenses required to be paid in connection with the Closing by Parent and Merger Sub as described further in this proxy statement under the caption “The Merger—Financing of the Merger; Damages Commitment.”
For more information, please see the section of this proxy statement captioned “The Merger — Parties Involved in the Merger.”
Platinum Falcon B 2018 RSC Limited
In connection with the Transactions, Platinum Falcon, an indirect wholly owned subsidiary of ADIA, has committed to provide Parent, at or prior to the Closing with an aggregate cash amount of up to $900,000,000, which will be available, together with the other Equity Financing Commitments (as defined below), available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing to fund the aggregate Merger Consideration (including payments in respect of Smartsheet’s outstanding equity-based awards payable in connection with the Closing pursuant to the Merger Agreement) and to pay the fees and expenses required to be paid in connection with the Closing by Parent and Merger Sub as described further in this proxy statement under the caption “The Merger—Financing of the Merger; Damages Commitment.”
For more information, please see the section of this proxy statement captioned “The Merger — Parties Involved in the Merger.”
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The Merger
Upon the terms and subject to the conditions of the Merger Agreement and in accordance with the Washington Business Corporation Act (which we refer to as the “WBCA”), if the Merger is completed, Merger Sub will merge with and into Smartsheet, whereupon the separate corporate existence of Merger Sub shall cease, and Smartsheet will continue as the surviving corporation (which we refer to as the “Surviving Corporation”) and as a wholly owned subsidiary of Parent. As a result of the Merger, our common stock will no longer be publicly traded, will be delisted from NYSE and will be deregistered under the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”), and Smartsheet will no longer file periodic reports with the United States Securities and Exchange Commission (which we refer to as the “SEC”) on account of Smartsheet common stock. In addition, each outstanding share of our common stock (excluding shares held by (i) Parent, Merger Sub, or Smartsheet, or by any direct or indirect wholly owned subsidiary of Parent or Merger Sub, immediately prior to the Effective Time (as defined below) and (ii) any shareholder who has properly exercised and perfected such shareholder’s demand for dissenters’ rights Chapter 23B.13 of the WBCA and who has not effectively withdrawn or forfeited such holder’s dissenters’ rights) will be automatically converted into the right to receive $56.50 per share in cash (which we refer to as the “Merger Consideration”), without interest and less any applicable withholding of taxes. We refer to the shares of our common stock described in clause (i) of the preceding sentence as “Canceled Shares,” and we refer to the shares of our common stock described in clause (ii) of the preceding sentence as “Dissenting Shares.” Following the Merger, you will not own any shares of the capital stock of the Surviving Corporation.
After the Merger is completed, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a shareholder, except that shareholders who properly demand, and do not subsequently withdraw, fail to perfect, or lose, their appraisal rights under Chapter 23B.13 of the WBCA (which we refer to as “Chapter 23B.13”) will have the right to receive a payment for the “fair value” of their shares of our common stock as determined pursuant to an appraisal proceeding as contemplated by Chapter 23B.13, as described in the section of this proxy statement captioned “The Merger — Dissenters’ Rights.”
The Merger will become effective at the day and time of the filing and acceptance of the certificate of merger with the Secretary of State of the State of Washington, or at such later time and day as is agreed upon in writing by the parties and specified in the certificate of merger (which we refer to as the “Effective Time”).
For more information, see the section of this proxy statement captioned “The Merger.”
Treatment of Equity Awards
Pursuant to the terms of the Merger Agreement, at the Effective Time:
•Each compensatory option to purchase shares of our common stock (each of which we refer to as a “Company Option”) that is vested in accordance with its terms and outstanding as of immediately prior to the Effective Time (each of which we refer to as a “Vested Company Option”) will be canceled and converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (i) the excess, if any, of (a) the Merger Consideration over (b) the per-share exercise price for such Vested Company Option, by (ii) the total number of shares of our common stock underlying such Vested Company Option, subject to any required withholding of taxes (which we refer to as the “Vested Option Consideration”).
•Each Company Option that is outstanding as of immediately prior to the Effective Time and that is not a Vested Company Option (each of which we refer to as an “Unvested Company Option”) will be canceled and converted into the contingent right to receive an aggregate amount in cash without interest (which we refer to as a “Converted Cash Award”) equal to the product obtained by multiplying (i) the excess, if any, of (a) the Merger Consideration over (b) the per share exercise price for such Unvested Company Option, by (ii) the total number of shares of our common stock underlying such Unvested Company Option, with such amount subject to any required withholding of taxes.
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•Each Company Option, whether vested or unvested, with an exercise price that is equal to or greater than the Merger Consideration will be canceled without any cash payment or other consideration being made in respect of such Company Option.
•Each restricted stock unit with respect to shares of our common stock that vests solely on the basis of time (each of which we refer to as a “Company RSU”) that is outstanding as of immediately prior to the Effective Time and is either (i) held by a non-employee member of the Board of Directors (whether vested or unvested) or (ii) vested in accordance with its terms but not yet settled as of the Effective Time (each of which we refer to as a “Vested Company RSU”) will be canceled and converted into the right to receive an amount in cash, without interest, equal to the product obtained by multiplying (a) the total number of shares of our common stock underlying such Vested Company RSU, by (b) the Merger Consideration, subject to any required withholding of taxes (which we refer to as the “Vested RSU Consideration”).
•Each Company RSU that is outstanding as of immediately prior to the Effective Time and not a Vested Company RSU (each of which we refer to as an “Unvested Company RSU”) will be canceled and converted into the contingent right to receive a Converted Cash Award with respect to an aggregate amount in cash, without interest, equal to the product obtained by multiplying (i) the total number of shares of our common stock underlying such Unvested Company RSU, by (ii) the Merger Consideration, with such amount subject to any required withholding of taxes.
•Each restricted stock unit with respect to shares of our common stock that vests on the basis of, in whole or in part, performance (each of which we refer to as a “Company PSU” and, together with the Company Options and the Company RSUs, the “Company Equity Awards”) that is outstanding as of immediately prior to the Effective Time and is vested in accordance with its terms but not yet settled as of the Effective Time (each of which we refer to as a “Vested Company PSU”) will be canceled and converted into the right to receive an aggregate amount in cash, without interest, equal to the product obtained by multiplying (i) the number of shares of our common stock underlying such Vested Company PSU, by (ii) the Merger Consideration, subject to any required withholding of taxes (which we refer to as the “Vested PSU Consideration”).
•The achievement of applicable performance metrics of each Company PSU that is outstanding as of immediately prior to the Effective Time and not a Vested Company PSU (each of which we refer to as an “Unvested Company PSU”) for which the applicable performance period has not been completed, will be determined, prior to the Effective Time in good faith by the Board of Directors or a committee thereof in accordance with the terms of the applicable Company PSU award agreement (any achieved Unvested Company PSUs, which we refer to as the “Achieved Unvested Company PSUs”). Each Achieved Unvested Company PSU will be canceled and converted into a Converted Cash Award with respect to an amount in cash, without interest, equal to the product obtained by multiplying (i) the number of shares of our common stock underlying such Achieved Unvested Company PSU, by (ii) the Merger Consideration, with such amount subject to any required withholding of taxes.
•Subject to the holder’s continued service with Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates, any Converted Cash Awards converted as described above will vest and become payable at the same time as the Company Equity Award from which such Converted Cash Award was converted would have vested pursuant to its terms and will otherwise remain subject to the same terms and conditions as were applicable to the underlying Company Equity Award immediately prior to the Effective Time, including vesting acceleration terms (except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Converted Cash Awards, provided that no such changes shall adversely affect the rights of the applicable holder unless necessary to comply with applicable law).
•In addition, the Board of Directors (or a committee thereof administering the Company’s Employee Share Purchase Plan (which we refer to as the “ESPP”)) has taken action so that: (i) participation in the ESPP is
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limited to those employees who were participants on September 24, 2024; (ii) participants may not increase their payroll deduction elections or rate of contributions from those in effect on September 24, 2024 or make any separate non-payroll contributions to the ESPP on or following September 24, 2024; (iii) no offering or purchase period will be commenced after September 24, 2024; (iv) the current offering period that commenced on July 1, 2024 will continue and the final purchase and issuance of shares of our common stock for the current offering period will occur as of the earlier of (a) no later than five days prior to the day on which the Effective Time occurs and (b) December 31, 2024; and (v) the ESPP will terminate immediately prior to, but contingent upon the occurrence of, the Effective Time, and subsequent to the exercise of purchase rights on such purchase date (in accordance with the terms of the ESPP). On such exercise date, the Company will apply the funds credited as of such date pursuant to the ESPP within each participant’s payroll withholding account to the purchase of whole shares of our common stock in accordance with the terms of the ESPP, as amended pursuant to the Merger Agreement, and each share purchased thereunder immediately prior to the Effective Time will be canceled at the Effective Time and converted into the right to receive the Merger Consideration in accordance with the Merger Agreement, subject to withholding of any applicable withholding taxes. Any accumulated contributions of each participant under the ESPP as of immediately prior to the Effective Time will, to the extent not used to purchase shares in accordance with the terms and conditions of the ESPP, as amended pursuant to the Merger Agreement, be refunded to such participant as promptly as practicable following the Effective Time (without interest).

For more information, please see the sections of this proxy statement captioned “The Merger — Interests of Smartsheet’s Directors and Executive Officers in the Merger” and “The Merger Agreement—Treatment of Smartsheet Equity Awards.”
Financing of the Merger; Damages Commitment
The obligation of Parent and Merger Sub to consummate the Merger is not subject to any financing condition. In connection with the financing of the Merger, each of Blackstone Capital Partners IX L.P. and Blackstone Capital Partners IX (Lux) SCSp (collectively, “BX IX”), VEPF VIII, and Platinum Falcon (each an “Equity Investor” and collectively the “Equity Investors”) has entered into an equity commitment letter with Parent (each such letter an “Equity Commitment Letter” and collectively, the “Equity Commitment Letters”), pursuant to which, among other things, the Equity Investors will provide Parent with an equity commitment of up to an aggregate of $4,758,000,000 in cash which may be reduced in accordance with the terms set forth in the Equity Commitment Letters (the “Equity Financing Commitments”). The Equity Financing Commitments will be available to Parent (subject to the terms and conditions set forth therein), together with available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing, to fund the payment of (i) the aggregate Merger Consideration, the Vested Option Consideration, the Vested RSU Consideration and the Vested PSU Consideration, and (ii) the fees and expenses, to the extent required to be paid by Parent or Merger Sub in cash on the Closing Date in connection with the Closing. Smartsheet can enforce Parent’s right to cause the equity commitment to be funded under each Equity Commitment Letter against the applicable Equity Investor subject to the terms and conditions of the relevant Equity Commitment Letter and, under the terms of the Merger Agreement, Smartsheet has the right to specifically enforce Parent’s obligation to consummate the Merger, subject to, among other conditions, the satisfaction of the conditions to Parent and Merger Sub’s obligations to consummate the Merger set forth in the Merger Agreement.
Each Equity Investor has severally committed to capitalize Parent on the Closing on the terms and subject to the conditions set forth in its Equity Commitment Letter. For more information, see the section of this proxy statement captioned “The Merger—Financing of the Merger; Damages Commitment.”
Subject to the terms and conditions of the limited guaranties which were entered into by each Equity Investor in favor of Smartsheet on September 24, 2024 (each such guaranty, a “Limited Guaranty” and collectively, the “Limited Guaranties”), each Equity Investor agreed to severally guarantee its pro rata share of the payment of all of the Guaranteed Obligations (as defined below) of Parent or Merger Sub (as applicable) to Smartsheet under the Merger Agreement, subject to a cap equal to (i) $223,412,000 for BX IX; (ii) $186,042,000 for VEPF VIII; and (iii) $95,546,000 for Platinum Falcon.
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For more information, please see the section of this proxy statement captioned “The Merger — Financing of the Merger; Damages Commitment.”
Conditions to the Merger
The obligations of Smartsheet, Parent and Merger Sub, as applicable, to consummate the Merger are subject to the satisfaction or waiver (if permissible under applicable law) of certain conditions, including (as described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”) the following:
•the approval of the Merger Agreement by Smartsheet shareholders;
•the absence of any legal restraints restraining, enjoining, preventing, prohibiting, or otherwise making illegal the consummation of the Merger;
•the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and any customary timing agreement delaying the Closing entered into in connection therewith and any commitment to, or agreement with, any governmental authority not to close the Transactions before a certain date; and
•the receipt of certain foreign antitrust and foreign direct investment, approvals, clearances, and consents (including deemed approvals in the event that the relevant authority fails to issue a decision within the required time period specified by applicable Law).
The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (if permissible under applicable law) of certain additional conditions, including (as described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”) the following:
•the accuracy of the representations and warranties of Smartsheet in the Merger Agreement, subject to applicable materiality or other qualifiers, as of certain dates set forth in the Merger Agreement;
•Smartsheet having performed and complied in all material respects with all covenants under the Merger Agreement required to be performed and complied with by it at or prior to the closing of the Merger;
•receipt by Parent of a customary closing certificate of Smartsheet; and
•the absence of any Company Material Adverse Effect (as defined in the section of this proxy statement captioned “The Merger Agreement—Representations and Warranties”) having occurred after the date of the Merger Agreement.
The obligations of Smartsheet to consummate the Merger are subject to the satisfaction or waiver (if permissible under applicable law) of certain additional conditions, including (as described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”), the following:
•the accuracy of the representations and warranties of Parent and Merger Sub in the Merger Agreement, subject to applicable materiality or other qualifiers, as of certain dates set forth in the Merger Agreement;
•Parent and Merger Sub having performed and complied in all material respects with all covenants under the Merger Agreement required to be performed and complied with by it at or prior to the closing of the Merger; and
•receipt by Smartsheet of a customary closing certificate of Parent and Merger Sub.
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Regulatory Approvals Required for the Merger
The completion of the Merger is subject to, among other conditions described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”:
•the expiration or termination of the waiting periods, if any, applicable to the merger pursuant to the HSR Act; and the absence, expiration, or termination of any agreement with any governmental authority not to consummate the Merger, including any agreement with any governmental authority to stay, toll or extend any applicable waiting period;
•all consents, approvals and filings required under certain specified foreign antitrust and competition and foreign direct investment laws having been obtained or made (including deemed approvals in the event that the relevant authority fails to issue a decision within the required time period specified by applicable law), and all waiting periods (including any extensions thereof and including any timing agreements with applicable governmental authorities) relating to the execution, delivery, and performance of the Merger agreement and the consummation of the Merger having expired or otherwise been terminated under any such laws; and
•the absence of (i) any injunction or other order issued by any governmental authority of competent jurisdiction, or (ii) any law applicable to the Merger, that in the case of each of the foregoing clauses (i) or (ii), prohibits or makes illegal the consummation of the Merger.
For more information, please see the section of this proxy statement captioned “The Merger — Regulatory Approvals Required for the Merger.”
Under the Merger Agreement, Parent, Merger Sub, and Smartsheet have agreed to use their reasonable best efforts to take all actions that are necessary, proper, or advisable to consummate and make effective, as promptly as reasonably practicable, the Transactions, so as to enable the Closing to occur as promptly as practicable, including by defending or resisting any actions, lawsuits, or other legal proceedings challenging or seeking to enjoin or otherwise prevent the Transactions.
No party may withdraw any filing, or commit to or agree with any governmental entity to stay, toll, or extend, any applicable waiting period or enter into any similar timing agreement, without the prior written consent of the other parties.
Recommendation of the Board of Directors
Smartsheet’s board of directors (which we refer to as the “Board of Directors”), after careful consideration, including considering the factors more fully described in the enclosed proxy statement, has unanimously (i) determined that it is in the best interests of Smartsheet and the shareholders of Smartsheet, and declared it advisable, to enter into the Merger Agreement; (ii) approved the execution, delivery and performance of the Merger Agreement and the consummation of the Transactions, including the Merger, with Smartsheet surviving as a wholly owned subsidiary of Parent, in accordance with the WBCA; (iii) resolved to recommend that Smartsheet’s shareholders approve the Merger Agreement; and (iv) directed that the Merger Agreement be submitted to Smartsheet’s shareholders at the Company Shareholders’ Meeting for their approval.
Prior to the approval of the Merger Agreement by our shareholders, under certain circumstances, the Board of Directors may withdraw or change the foregoing recommendation if it determines in good faith (after consultation with its legal counsel and financial advisors) that failure to do so would be inconsistent with the Board of Directors’ fiduciary duties to Smartsheet shareholders under applicable law. However, the Board of Directors cannot withdraw or change the foregoing recommendation unless it complies with certain procedures in the Merger Agreement, including, but not limited to, negotiating with Parent and its representatives in good faith over a four business day period, after which the Board of Directors shall have determined that the failure of the Board of Directors to make a change of recommendation would be inconsistent with the Board of Directors’ fiduciary duties to Smartsheet
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shareholders under applicable law. The termination of the Merger Agreement by us following the Board of Directors’ authorization for us to enter into a definitive agreement to consummate an alternative transaction contemplated by a Superior Proposal (as defined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement — The Go-Shop Period — Solicitation of Other Offers”) will result in the payment by us of a termination fee of either (i) $125,000,000 if the Merger Agreement is terminated before 11:59 p.m. Pacific Time on November 8, 2024 for the purpose of entering into an agreement with respect to a Superior Proposal received from a party other than a No-Shop Party (as defined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement — The Go-Shop Period — Solicitation of Other Offers”), or (ii) $250,000,000, in the case of any other such termination. For more information, please see the section of this proxy statement captioned “Proposal 1: Approval of the Merger.”
The Board of Directors unanimously recommends that you vote (i) “FOR” the proposal to approve the Merger Agreement and the Transactions (which we refer to as the “Merger Proposal”), (ii) “FOR” the proposal to approve, on a non-binding basis, certain compensation that may be paid or become payable to the Company’s named executive officers in connection with the Merger (which we refer to as the “Compensation Proposal”), and (iii) “FOR” the proposal to adjourn the Company Shareholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to approve the Merger Agreement at the time of the Company Shareholders’ Meeting (which we refer to as the “Adjournment Proposal”).
Opinion of Smartsheet’s Financial Advisor
Qatalyst Partners LP (which we refer to as “Qatalyst Partners”) delivered its oral opinion to Smartsheet’s Board on September 24, 2024, subsequently confirmed in writing, to the effect that, as of September 24, 2024, and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth therein, the per share price to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of our common stock (other than Parent or any affiliate of Parent) was fair, from a financial point of view, to such holders.
The full text of the written opinion of Qatalyst Partners, dated September 24, 2024, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion, is attached to this proxy statement as Annex C. The summary of Qatalyst Partners’ opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Qatalyst Partners’ written opinion. Qatalyst Partners provided Smartsheet with financial advisory services and its opinion in connection with the Merger. Qatalyst Partners’ opinion is not a recommendation as to how any holder of shares of our common stock should vote with respect to the merger or any other matter and does not in any manner address the price at which our common stock will trade at any time.
For more information, see the section of this proxy statement titled “The Merger — Opinion of Smartsheet’s Financial Advisor.”
Interests of Smartsheet’s Directors and Executive Officers in the Merger
When considering the recommendation of the Board of Directors that you vote to approve the proposal to approve the Merger Agreement, you should be aware that our directors and executive officers have interests in the Merger that are different from, or in addition to, your interests as a shareholder generally, as more fully described below in this section of this proxy statement captioned “The Merger—Interests of Smartsheet’s Directors and Executive Officers in the Merger.” In (i) evaluating and negotiating the Merger Agreement; (ii) approving the Merger Agreement and the Merger; and (iii) recommending that Smartsheet’s shareholders approve the Merger
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Proposal, the Board of Directors was aware of and considered, among other matters, these interests (to the extent that they existed at that time). These interests include the following:
•for our non-employee directors, the accelerated vesting, at or immediately prior to the Effective Time of the Company RSUs;
•for our current executive officers, the treatment of their outstanding Company Equity Awards;
•the eligibility of each current executive officer to receive severance payments and benefits under the executive officer’s applicable change in control severance agreement in the event of a qualifying termination of employment (as described in the applicable executive officer’s change in control severance agreement) prior to or following the Effective Time;
•the eligibility of each current executive officer to potentially receive payment of the fiscal 2025 annual bonus payment if the executive officer is terminated without “cause” between the Effective Time and the payment date for the annual bonus (along with all other Company employees who participate in the fiscal 2025 annual bonus plan); and
•the continuation of indemnification and directors’ and officers’ liability insurance by the Surviving Corporation following the Effective Time and for at least six years thereafter.
For more information, see the section of this proxy statement captioned “The Merger — Interests of Smartsheet’s Directors and Executive Officers in the Merger.”
Dissenters’ Rights
Under Chapter 23B.13 of the WBCA, instead of receiving the Merger Consideration they would otherwise be entitled to pursuant to the Merger Agreement, holders of Smartsheet’s common stock are entitled to dissent from and obtain payment of the fair value of their shares in cash together with accrued interest from the effective time, if the Merger is consummated. Any Smartsheet shareholder electing to dissent from the Merger must strictly comply with all procedures required under the WBCA. The procedures are summarized in “The Merger—Dissenters’ Rights” and a copy of the relevant statutory provisions is attached as Annex D to this proxy statement.
U.S. Federal Income Tax Considerations of the Merger
The receipt of cash by a holder in exchange for such holder’s shares of our common stock in the Merger generally will be a taxable transaction for U.S. federal income tax purposes. Such receipt of cash by a Smartsheet shareholder that is a U.S. Holder (which we define in the section of this proxy statement captioned “The Merger— U.S. Federal Income Tax Considerations of the Merger—U.S. Holders”) generally will result in the recognition of capital gain or loss in an amount measured by the difference, if any, between the amount of cash that such U.S. Holder receives in the Merger and such U.S. Holder’s adjusted tax basis in the shares of our common stock surrendered in the Merger. Such receipt of cash by a Smartsheet shareholder that is a Non-U.S. Holder (as defined below under the section of this proxy statement captioned “The Merger— U.S. Federal Income Tax Considerations of the Merger—Non-U.S. Holders”) generally will not be subject to U.S. federal income tax, unless the Non-U.S. Holder has certain connections to the United States described in detail below in the section of this proxy statement captioned “The Merger— U.S. Federal Income Tax Considerations of the Merger—Non-U.S. Holders.”
For more information, see the section of this proxy statement captioned “The Merger — U.S. Federal Income Tax Considerations of the Merger.” Shareholders should consult their tax advisors concerning the U.S. federal income tax consequences relating to the Merger in light of their particular circumstances and any consequences arising under the laws of any state, local, or non-U.S. taxing jurisdiction.
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Acquisition Proposals
The Go-Shop Period—Solicitation of Other Acquisition Proposals
Under the Merger Agreement, from the execution of the Merger Agreement until 11:59 p.m. Pacific Time on November 8, 2024 (such date, the “No-Shop Period Start Date” and, such period, the “Go-Shop Period”), we and our subsidiaries and respective representatives have the right to, among other things and with respect to any person that is not a No Shop Party (as defined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement—The Go-Shop Period—Solicitation of Other Offers”): (i) solicit, initiate, propose, or induce the making of, submission or announcement of, or knowingly encourage, facilitate, or assist, any proposal or inquiry that constitutes, or is reasonably expected to lead to, an Alternative Acquisition Proposal (as defined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement—The Go-Shop Period—Solicitation of Other Offers”), (ii) provide information (including non-public information and data) of, or afford access to, Smartsheet and our subsidiaries to any third person that has entered into an Acceptable Confidentiality Agreement (as defined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement—The Go-Shop Period—Solicitation of Other Offers”), and (iii) participate or engage in any discussions or negotiations with any third person with respect to any Alternative Acquisition Proposals. All of the parties contacted in connection with our go-shop process affirmatively declined to evaluate a potential transaction.
The No-Shop Period—No Solicitation of Other Alternative Acquisition Proposals
Under the Merger Agreement (i) from the execution of the Merger Agreement until the earlier of the Effective Time and the date on which the Merger Agreement is validly terminated pursuant to its terms (the “Termination Date”) with respect to any No-Shop Party, and (ii) from the No-Shop Period Start Date until the earlier to occur of the Termination Date and the Effective Time with respect to any other person, we may not: (a) solicit, initiate, propose or induce the making, submission, or announcement of, or knowingly encourage, facilitate, or assist, any proposal or inquiry that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (b) furnish or afford to any such person any non-public information relating to Smartsheet in any such case with the intent to induce the making, submission, or announcement of, or to knowingly encourage, facilitate, or assist, any proposal or inquiry that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (c) participate or engage in discussions or negotiations with any person with respect to any inquiry or proposal that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; (d) approve, endorse or recommend any proposal that constitutes, or would reasonably be expected to lead to, an Alternative Acquisition Proposal; or (e) negotiate or enter into any contract relating to an Alternative Acquisition Proposal, other than a confidentiality agreement permitted pursuant to the terms of the Merger Agreement.
Notwithstanding the foregoing, under certain specified circumstances, from the execution of the Merger Agreement until the approval of the Merger Agreement by our shareholders, we may, among other things, participate in discussions or negotiations with, and furnish non-public information relating to Smartsheet or our subsidiaries to, pursuant to an Acceptable Confidentiality Agreement to any person that has made or delivered to Smartsheet an Alternative Acquisition Proposal after the date of the Merger Agreement that did not result from a breach of our obligations under the Merger Agreement, and otherwise facilitate such Alternative Acquisition Proposal or assist such person with such Alternative Acquisition Proposal (if requested by such person), if the Board of Directors has determined in good faith (after consultation with its financial advisor and outside legal counsel) that such Alternative Acquisition Proposal either constitutes a Superior Proposal (as defined in the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement—The Go-Shop Period—Solicitation of Other Offers”) or could reasonably be expected to result in a Superior Proposal and the Board of Directors has determined in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to take the actions in respect of such Alternative Acquisition Proposal would be inconsistent with its fiduciary duties under applicable law. For more information, please see the section of this proxy statement captioned “Proposal 1: Approval of the Merger Agreement—The No-Shop Period—No Solicitation of Other Offers.”
Both during the Go-Shop Period and after the No-Shop Period Start Date but prior to the approval of the Merger Agreement by our shareholders, we are entitled to terminate the Merger Agreement to enter into a definitive
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agreement in respect of a Superior Proposal only if it complies with certain procedures in the Merger Agreement, including, but not limited to, negotiating with Parent in good faith over a four business day period in an effort to amend the terms and conditions of the Merger Agreement and other agreements so that such Superior Proposal no longer constitutes a Superior Proposal relative to the transactions contemplated by the Merger Agreement, amended pursuant to such negotiations.
Company Board Recommendation Change
The Board of Directors has unanimously recommended that you vote “FOR” the Merger Proposal.
The Merger Agreement provides that the Board of Directors may not change its recommendation, or take other actions constituting a Recommendation Change (which we define in the section of this proxy statement captioned “The Merger Agreement — The Board of Directors’ Recommendation; Company Board Recommendation Change”), except in certain specified circumstances relating to:
•our receipt of a Superior Proposal; or
•the occurrence of an Intervening Event (which we define in the section of this proxy statement captioned “The Merger Agreement — The Board of Directors’ Recommendation; Company Board Recommendation Change”).
For more information, see the section of this proxy statement captioned “The Merger Agreement — The Board of Directors’ Recommendation; Company Board Recommendation Change.”
Termination of the Merger Agreement
The Merger Agreement contains certain termination rights for Smartsheet, on the one hand, and Parent, on the other hand, including but not limited to, Parent and Smartsheet each having the right to terminate the Merger Agreement at any time prior to the Effective Time (whether prior to or after the receipt of the requisite Smartsheet shareholder approval) by (i) mutual written agreement, or (ii) if the Merger is not consummated on or before April 24, 2025, subject to an extension until September 24, 2025 under certain circumstances for the purpose of obtaining certain regulatory approvals. Termination rights are further described in the section of this proxy statement captioned “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement — Expenses; Termination Fees.”
Except in specified circumstances, whether or not the Merger is completed, Smartsheet, on the one hand, and Parent and Merger Sub, on the other hand, are each responsible for all of their respective fees and expenses incurred in connection with the Transactions.
Smartsheet will be required to pay to Parent a termination fee of $250,000,000 if the Merger Agreement is terminated under specified circumstances (or $125,000,000 under certain specified circumstances during the Go-Shop Period). Parent will be required to pay to Smartsheet a termination fee of $500,000,000 if the Merger Agreement is terminated under specified circumstances.
For more information on the termination fee, see the section of this proxy statement captioned “The Merger Agreement — Termination Fees.”
Specific Performance
Parent, Merger Sub, and Smartsheet are entitled, in addition to any other remedy to which they are entitled at law or equity, to an injunction, specific performance, and other equitable relief to prevent breaches of the Merger Agreement and to specifically enforce the terms of the Merger Agreement. Smartsheet has the right, subject to the terms and conditions of the Merger Agreement and the Equity Commitment Letters, to an injunction, specific
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performance, or other equitable remedies in connection with enforcing Parent and Merger Sub’s equity financing to fund the Merger.
For more information, see the section of this proxy statement captioned “The Merger Agreement — Specific Performance.”
Effect on Smartsheet if the Merger is Not Completed
If the Merger Agreement is not adopted by our shareholders or if the Merger is not completed for any other reason, shareholders will not receive any payment for their shares of our common stock. Instead, Smartsheet will remain an independent public company, our common stock will continue to be listed and traded on NYSE and registered under the Exchange Act, and we will continue to file periodic reports with the SEC on account of Smartsheet common stock. The termination of the Merger Agreement by us following the Board of Directors’ authorization for us to enter into a definitive agreement to consummate an alternative transaction contemplated by a Superior Proposal (as defined in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement — The Go-Shop Period — Solicitation of Other Offers”) will result in the payment by us of a termination fee of either (i) $125,000,000 if the Merger Agreement is terminated before 11:59 p.m. Pacific Time on November 8, 2024 for the purpose of entering into an agreement with respect to a Superior Proposal received from a party other than a No-Shop Party (as defined in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement — The Go-Shop Period — Solicitation of Other Offers”) or (ii) $250,000,000, in the case of any other such termination. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger.” Parent will be required to pay to Smartsheet a termination fee of $500,000,000 if the Merger Agreement is terminated under specified circumstances.
For more information, see the section of this proxy statement captioned “The Merger — Effect on Smartsheet if the Merger is Not Completed.”
The Company Shareholders’ Meeting
Date, Time, and Place
A special meeting of shareholders of Smartsheet (which we refer to as the “Company Shareholders’ Meeting”) will be held virtually via live webcast on December 9, 2024, at 10:00 a.m., Pacific Time (unless the Company Shareholders’ Meeting is adjourned or postponed). You may attend the Company Shareholders’ Meeting via the Internet at www.virtualshareholdermeeting.com/SMAR2024SM. Please note that you will not be able to attend the Company Shareholders’ Meeting physically in person. For purposes of attendance at the Company Shareholders’ Meeting, all references in this proxy statement to “attendance at the Company Shareholders’ Meeting” or “present at the Company Shareholders’ Meeting” mean virtually attending and present at the Company Shareholders’ Meeting.
Record Date; Shares of our Common Stock Entitled to Vote
You are entitled to vote at the Company Shareholders’ Meeting if you owned shares of Smartsheet common stock at the close of business on October 25, 2024 (which we refer to as the “Record Date”). You will have one vote at the Company Shareholders’ Meeting for each share of our common stock that you owned at the close of business on the Record Date.
Purpose
At the Company Shareholders’ Meeting, we will ask shareholders to vote on proposals to approve (i) the Merger Proposal, (ii) the Compensation Proposal, and (iii) the Adjournment Proposal.
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Quorum
As of the Record Date, there were 139,300,914 shares of our common stock outstanding and entitled to vote at the Company Shareholders’ Meeting. The holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business.
Votes Required
The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote as of the close of business on the Record Date. As of the Record Date, 69,650,458 votes constitute a majority of the issued and outstanding shares of our common stock entitled to vote on the Merger Proposal.
The approval of the Compensation Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote on such matters that are present in person or represented by proxy at the meeting and are voted for or against the matter.
The approval of the Adjournment Proposal, if necessary or appropriate, requires that the affirmative vote of the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote on such matters that are present in person or represented by proxy at the meeting and are voted for or against the matter.
Share Ownership of Our Directors and Executive Officers
As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, 1,713,716 shares of our common stock, representing approximately 1.2% of the shares of our common stock outstanding on the Record Date.
We currently expect that our directors and executive officers will vote all of their respective shares of our common stock: (i) “FOR” the Merger Proposal, (ii) “FOR” for the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
Share Ownership of Vista
As of the Record Date, an affiliate of Vista Equity Partners, VEPF VIII SPV I, L.P., a Delaware limited partnership (the “Vista Shareholder”) beneficially owned and was entitled to vote, in the aggregate, 6,466,672 shares of our common stock, representing approximately 4.6% of the shares of our common stock outstanding on the Record Date. In connection with the execution of the Merger Agreement, Smartsheet, and the Vista Shareholder entered into a Support Agreement, a copy of which is attached hereto as Annex B, pursuant to which the Vista Shareholder agreed, among other things, to vote its shares of our common stock in favor of the adoption of the Merger Agreement and the approval of the Merger and against any other action, agreement or proposal which to its knowledge would reasonably be expected to prevent or materially impede or materially delay the consummation of the Merger or any of the other Transactions. The Support Agreement also includes certain restrictions on transfer of its shares of our common stock by the Vista Shareholder.
Voting and Proxies
Any shareholder of record entitled to vote may submit a proxy by returning a signed proxy card by mail in the accompanying prepaid reply envelope or granting a proxy electronically over the Internet or by telephone, or may vote online during the Company Shareholders’ Meeting. If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker, or other nominee, you should instruct your bank, broker, or other nominee on how you wish to vote your shares of our common stock using the instructions provided by your bank, broker, or other nominee. It is important that you cast your vote or instruct your bank, broker, or other nominee on how you wish to vote your shares of our common stock. 
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If you are a shareholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Company Shareholders’ Meeting by (i) signing another proxy card with a later date and returning it prior to the Company Shareholders’ Meeting; (ii) submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy; (iii) delivering a written notice of revocation, prior to the Company Shareholders’ Meeting, to our Corporate Secretary at 500 108th Ave NE, Suite 200, Bellevue, Washington 98004; or (iv) attending the Company Shareholders’ Meeting virtually and voting.
If you hold your shares of our common stock in “street name,” you should contact your bank, broker, or other nominee for instructions regarding how to change your vote. You may also vote online at the Company Shareholders’ Meeting if you obtain a “legal proxy” from your bank, broker, or other nominee.
For more information, see the section of this proxy statement captioned “The Company Shareholders’ Meeting.”
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QUESTIONS AND ANSWERS
The following questions and answers address some commonly asked questions regarding the Merger, the Merger Agreement and the Company Shareholders’ Meeting. These questions and answers may not address all questions that are important to you. We encourage you to read carefully the more detailed information contained elsewhere in this proxy statement and the full text of the annexes to this proxy statement and the documents we refer to in this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the Merger, the Merger Agreement, and the Company Shareholders’ Meeting. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.”
Q:Why am I receiving these materials?
A:On September 24, 2024, Smartsheet entered into an agreement that, if adopted by Smartsheet’s shareholders (and subject to other conditions contained therein), will result in Smartsheet becoming a wholly owned subsidiary of Parent. The Board of Directors is furnishing this proxy statement and form of proxy card to our shareholders in connection with the solicitation of votes to adopt the Merger Agreement and a related proposal.
Q:What am I being asked to vote on at the Company Shareholders’ Meeting?
A:You are being asked to vote on the following proposals:
(1)To adopt the Merger Agreement, pursuant to which Merger Sub will merge with and into Smartsheet, whereupon the separate corporate existence of Merger Sub shall cease, and Smartsheet will become a wholly owned subsidiary of Parent;
(2)To approve, on a non-binding advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger; and
(3)To adjourn the Company Shareholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Shareholders’ Meeting.
Q:Why is the proposed Merger in the best interests of Smartsheet shareholders?
A:Smartsheet believes the Merger delivers compelling, certain and immediate cash value to Smartsheet shareholders. The Board of Directors thoroughly reviewed the proposal in consultation with our advisors and unanimously determined that the offer from the Buyers provided shareholders with greater risk-adjusted value than did Smartsheet’s standalone opportunity. For more information, please see the section of this proxy statement captioned “The Merger — Recommendation of the Board of Directors and Reasons for the Merger.”
Q:When and where is the Company Shareholders’ Meeting?
A:The Company Shareholders’ Meeting will take place on December 9, 2024, at 10:00 a.m., Pacific Time (unless the Company Shareholders’ Meeting is adjourned or postponed), virtually via live webcast. You may attend the Company Shareholders’ Meeting via the Internet at www.virtualshareholdermeeting.com/SMAR2024SM. Please note that you will not be able to attend the Company Shareholders’ Meeting physically in person. You will need the 16 digit control number included on your proxy card in order to be able to vote your shares of our common stock on the Company Shareholders’ Meeting website. If you are a registered shareholder, your control number is included on your proxy card. If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker, or other nominee, you will also need your 16 digit control number in order to vote on the Company Shareholders’ Meeting website. Instructions on how to attend and participate online are on the proxy card. We expect check-in to be available starting around 9:45 a.m., Pacific Time, on the day of the Company Shareholders’ Meeting, and you should allow ample time for check-in proceedings. We
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will have technicians standing by and ready to assist you with any technical difficulties you may have in accessing the virtual live webcast. If you encounter any difficulties accessing the virtual live webcast during the check-in or meeting time, please call the support team toll-free at 1 (844) 986-0822 or (303) 562-9302 for international calls.
Q:What constitutes a quorum for the Company Shareholders’ Meeting?
A:The shareholders holding a majority of the voting power of the shares of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. There must be a quorum for business to be conducted at the Company Shareholders’ Meeting. Failure of a quorum to be present at the Company Shareholders’ Meeting will necessitate an adjournment or postponement and will subject Smartsheet to additional expense. As of the Record Date, there were 139,300,914 shares of our common stock outstanding and entitled to vote at the Company Shareholders’ Meeting.
Q:Who is entitled to vote at the Company Shareholders’ Meeting?
A:Shareholders as of the close of business on October 25, 2024, which is the Record Date, are entitled to notice of the Company Shareholders’ Meeting and to vote at the Company Shareholders’ Meeting (and at any adjournment or postponement thereof). Each holder of shares of our common stock is entitled to cast one vote on each matter properly brought before the Company Shareholders’ Meeting for each share of our common stock owned as of the close of business on the Record Date.
Q:What is the proposed Merger and what effects will it have on Smartsheet?
A:The proposed Merger is the acquisition of Smartsheet by Parent. If the Merger Proposal is approved by our shareholders and the other closing conditions under the Merger Agreement are satisfied or otherwise waived, Merger Sub will merge with and into Smartsheet, whereupon the separate corporate existence of Merger Sub shall cease, with Smartsheet continuing as the Surviving Corporation. As a result of the Merger, Smartsheet will become a wholly owned subsidiary of Parent, and our common stock will no longer be publicly traded, and you will no longer have any interest in Smartsheet’s future earnings or growth. In addition, our common stock will be delisted from NYSE, deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of Smartsheet common stock, in each case in accordance with applicable law, rules, and regulations.
Q:What will I receive for my shares of common stock if the Merger is completed?
A:Upon completion of the Merger, you will be entitled to receive the Merger Consideration, which consists of $56.50 in cash, without interest and less any applicable withholding of taxes, for each share of our common stock that you own, unless you have properly exercised and perfected and not forfeited or withdrawn your dissenters’ rights under the WBCA with respect to such shares. For example, if you own 100 shares of our common stock, you will receive $5,650 in cash in exchange for your shares of our common stock, less any applicable withholding of taxes.
Q:What will the holders of Company Equity Awards receive in the Merger?
A:Pursuant to the terms of the Merger Agreement, at the Effective Time, (i) each Vested Company Option will be canceled and converted into the right to receive an amount in cash, without interest, equal to the Vested Option Consideration, (ii) each Unvested Company Option will be canceled and converted into a Converted Cash Award with respect to an amount in cash equal to the product obtained by multiplying (a) the excess, if any, of (1) the Merger Consideration over (2) the per share exercise price for such Unvested Company Option, by (b) the total number of shares of our common stock underlying such Unvested Company Option, (iii) each Company Option, whether vested or unvested, with an exercise price that is equal to or greater than the Merger Consideration will be canceled without any cash payment or other consideration being made in respect thereof, (iv) each Vested Company RSU will be canceled and converted into the right to receive an amount in cash,
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without interest, equal to the Vested RSU Consideration, (v) each Unvested Company RSU will be canceled and converted into the contingent right to receive a Converted Cash Award with respect to an amount in cash equal to the product obtained by multiplying (a) the total number of shares of our common stock underlying such Unvested Company RSU, by (b) the Merger Consideration, (vi) each Vested Company PSU will be canceled and converted into the right to receive an amount in cash, without interest, equal to the Vested PSU Consideration, and (vii) the achievement of applicable performance metrics of each Unvested Company PSU for which the applicable performance period has not been completed will be determined, prior to the Effective Time in good faith by the Board of Directors or a committee thereof in accordance with the terms of the applicable Company PSU award agreement, and each Achieved Unvested Company PSU will be canceled and converted into a Converted Cash Award with respect to an amount in cash equal to the product obtained by multiplying (a) the number of shares of our common stock underlying such Achieved Unvested Company PSU, by (b) the Merger Consideration.
Subject to the holder’s continued service with Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates, any Converted Cash Awards converted as described above will vest and become payable at the same time as the Company Equity Award from which such Converted Cash Award was converted would have vested pursuant to its terms and will otherwise generally remain subject to the same terms and conditions as were applicable to the underlying Company Equity Award immediately prior to the Effective Time, including vesting acceleration terms.
For more information, please see the sections of this proxy statement captioned “The Merger — Interests of Smartsheet’s Directors and Executive Officers in the Merger” and “The Merger Agreement—Treatment of Smartsheet Equity Awards.”
Q:What will happen to Smartsheet’s ESPP in connection with the Merger?
A:The Board of Directors (or a committee thereof administering the ESPP) has taken action so that: (i) participation in the ESPP is limited to those employees who were participants on September 24, 2024; (ii) participants may not increase their payroll deduction elections or rate of contributions from those in effect on September 24, 2024 or make any separate non-payroll contributions to the ESPP on or following September 24, 2024; (iii) no offering or purchase period will be commenced after September 24, 2024; (iv) the current offering period that commenced on July 1, 2024 will continue and the final purchase and issuance of shares of our common stock for the current offering period will occur as of the earlier of (a) no later than five days prior to the day on which the Effective Time occurs, and (b) December 31, 2024; and (v) the ESPP will terminate immediately prior to, but contingent upon the occurrence of, the Effective Time, and subsequent to the exercise of purchase rights on such purchase date (in accordance with the terms of the ESPP). On such exercise date, the Company will apply the funds credited as of such date pursuant to the ESPP within each participant’s payroll withholding account to the purchase of whole shares of our common stock in accordance with the terms of the ESPP, as amended pursuant to the Merger Agreement, and each share purchased thereunder immediately prior to the Effective Time will be canceled at the Effective Time and converted into the right to receive the Merger Consideration in accordance with the Merger Agreement, subject to withholding of any applicable withholding taxes. Any accumulated contributions of each participant under the ESPP as of immediately prior to the Effective Time will, to the extent not used to purchase shares in accordance with the terms and conditions of the ESPP, as amended pursuant to the Merger Agreement, be refunded to such participant as promptly as practicable following the Effective Time (without interest).
Q:How does the Merger Consideration compare to the market price of the common stock?
A:The $56.50 Merger Consideration represents (i) a premium of approximately 41% to the volume weighted average closing price of our common stock for the 90 trading days ending on July 17, 2024, the last full trading day prior to media reports regarding a possible sale transaction involving Smartsheet, and (ii) a premium of approximately 16% over the highest closing stock price over the last 12 months ending July 17, 2024.
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On November 1, 2024, the most recent practicable date before this proxy statement was first mailed to our shareholders, the closing price for our common stock on NYSE was $56.25 per share of our common stock. You are encouraged to obtain current market quotations for our common stock in connection with voting your shares of our common stock.
Q:What do I need to do now?
A:We encourage you to read this entire proxy statement, the annexes to this proxy statement and the documents that we refer to in this proxy statement carefully and consider how the Merger affects you. Then sign, date, and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone, so that your shares of our common stock can be voted at the Company Shareholders’ Meeting. A failure to vote your shares of Smartsheet common stock or an abstention from voting will have the same effect as a vote “AGAINST” the Merger Proposal. If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker, or other nominee, please refer to the voting instruction forms provided by your bank, broker, or other nominee to vote your shares of our common stock. Failure to instruct your bank, broker, or other nominee to vote your shares will have the same effect as a vote “AGAINST” the Merger Proposal.
Q:What happens if I sell or otherwise transfer my shares of Smartsheet common stock after the Record Date but before the Company Shareholders’ Meeting?
A:The Record Date for the Company Shareholders’ Meeting is earlier than the date of the Company Shareholders’ Meeting and the date the Merger is expected to be completed. If you sell or transfer your shares of our common stock after the Record Date but before the Company Shareholders’ Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares of our common stock and each of you notifies Smartsheet in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is completed, to the person to whom you sell or transfer your shares of our common stock, but you will retain your right to vote those shares at the Company Shareholders’ Meeting. Even if you sell or otherwise transfer your shares of our common stock after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone.
Q:How does the Board of Directors recommend that I vote?
A:The Board of Directors, after careful consideration, including considering the various factors described in the section of this proxy statement captioned “The Merger — Recommendation of the Board of Directors and Reasons for the Merger,” has unanimously (i) determined that it is in the best interests of Smartsheet and the shareholders of Smartsheet, and declared it advisable, to enter into the Merger Agreement; (ii) approved the execution, delivery, and performance of the Merger Agreement and the consummation of the Transactions, including the Merger, with Smartsheet surviving the Merger as a wholly owned subsidiary of Parent, in accordance with the WBCA; (iii) resolved to recommend that Smartsheet’s shareholders approve the Merger Agreement; and (iv) directed that the Merger Agreement be submitted to Smartsheet’s shareholders at the Company Shareholders’ Meeting for their approval.
The Board of Directors unanimously recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (ii) “FOR” the Adjournment Proposal.
Q:What happens if the Merger is not completed?
A:If the Merger Agreement is not adopted by our shareholders or if the Merger is not completed for any other reason, shareholders will not receive any payment for their shares of our common stock.
Instead, Smartsheet will remain an independent public company, our common stock will continue to be listed and traded on NYSE and registered under the Exchange Act, and we will continue to file periodic reports with
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the SEC on account of Smartsheet common stock. Upon the termination of the Merger Agreement under specified circumstances, Smartsheet may be required to pay to Parent a termination fee of up to $250,000,000, or Parent may be required to pay to Smartsheet a termination fee of $500,000,000, as further described in the section of this proxy statement captioned “The Merger Agreement — Expenses; Termination Fee.”
Q:What vote is required to approve the Merger Proposal?
A:The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock entitled to vote as of the close of business on the Record Date. The failure of any shareholder of record to (i) submit a signed proxy card; (ii) grant a proxy over the Internet or by telephone; or (iii) vote online during the Company Shareholders’ Meeting will have the same effect as a vote “AGAINST” the Merger Proposal. If you hold your shares of our common stock in “street name,” the failure to instruct your bank, broker, or other nominee how to vote your shares of our common stock will have the same effect as a vote “AGAINST” the Merger Proposal. Abstentions will have the same effect as a vote “AGAINST” the Merger Proposal.
Q:What vote is required to approve the Compensation Proposal?
A:In accordance with the rules of the SEC, shareholders have the opportunity to cast a non-binding, advisory vote to approve compensation that may be paid or become payable to our named executive officers based upon or otherwise relating to the Merger, as described in the table provided in the section captioned “The Merger —Quantification of Potential Payments and Benefits to our Named Executive Officers.” The vote to approve the Compensation Proposal is advisory and therefore will not be binding on us or Parent, nor will it overrule any prior decision or require our Board of Directors (or any committee of our Board of Directors) to take any action, regardless of whether the Merger is completed. The compensation plans and arrangements described herein are contractual in nature. Accordingly, if our shareholders adopt the Merger Agreement and the Merger is completed, the compensation based on or otherwise relating to the Merger may be payable to our named executive officers in accordance with the terms of the compensation plans and arrangements, regardless of whether our shareholders approve the compensation proposal.
Approval of the Compensation Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matters that are present in person or represented by proxy at the meeting. Assuming a quorum is present at the Company Shareholders’ Meeting, the failure of any shareholder of record to (i) submit a signed proxy card; (ii) grant a proxy over the Internet or by telephone; or (iii) vote online during the Company Shareholders’ Meeting will not have any effect on the Compensation Proposal. If you hold your shares of our common stock in “street name,” the failure to instruct your bank, broker, or other nominee how to vote your shares of our common stock will have no effect on the Compensation Proposal. Abstentions will also have no effect on the Compensation Proposal.
Q:What vote is required to approve the Adjournment Proposal?
A:Approval of the Adjournment Proposal, if necessary or appropriate, requires the affirmative vote a majority of the voting power of the shares of stock entitled to vote at the meeting and present in person or represented by proxy. Assuming a quorum is present at the Company Shareholders’ Meeting, the failure of any shareholder of record to (i) submit a signed proxy card; (ii) grant a proxy over the Internet or by telephone; or (iii) vote online during the Company Shareholders’ Meeting will not have any effect on the Adjournment Proposal. If you hold your shares of our common stock in “street name,” the failure to instruct your bank, broker, or other nominee how to vote your shares of our common stock will have no effect on the Adjournment Proposal. Abstentions will also have no effect on the Adjournment Proposal.
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Q:What is the difference between holding shares of Smartsheet common stock as a shareholder of record and as a beneficial owner?
A:If your shares of our common stock are registered directly in your name with our transfer agent, Equiniti Trust Company, LLC (the “Transfer Agent”), you are considered, with respect to those shares of our common stock, to be the “shareholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by Smartsheet.
If your shares of our common stock are held through a bank, broker, or other nominee, you are considered the “beneficial owner” of shares of our common stock held in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker, or other nominee who is considered, with respect to those shares of our common stock, to be the shareholder of record. As the beneficial owner, you have the right to direct your bank, broker, or other nominee how to vote your shares of our common stock by following their instructions for voting. You are also invited to attend the Company Shareholders’ Meeting. However, because you are not the shareholder of record, you may not vote your shares of our common stock virtually at the Company Shareholders’ Meeting unless you obtain a “legal proxy” from your bank, broker, or other nominee.
Q:How may I vote?
A:If you are a shareholder of record (that is, if your shares of our common stock are registered in your name with our Transfer Agent), there are four ways to vote:
•You may vote over the Internet prior to the Company Shareholders’ Meeting. You may vote your shares of our common stock over the Internet at www.proxyvote.com until 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting by following the instructions on the proxy card. If you vote over the Internet prior to the Company Shareholders’ Meeting, you do not need to vote during the Company Shareholders’ Meeting or by telephone or by mail.
•You may vote by telephone prior to the Company Shareholders’ Meeting. You may vote your shares of our common stock by calling 1 (800) 690-6903 until 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting. If you vote by telephone, you do not need to vote over the Internet or by mail.
•You may vote by mail prior to the Company Shareholders’ Meeting. If you wish to vote your shares of our common stock by mail, please sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope. If you vote by mail, you do not need to vote over the Internet or by telephone and your mailing must be received prior to the Company Shareholders’ Meeting.
•You may vote over the Internet during the Company Shareholders’ Meeting. You may vote your shares of our common stock over the Internet during the Company Shareholders’ Meeting by accessing the Company Shareholders’ Meeting website by following the instructions provided on the proxy card. You can then cast your votes by following the prompts provided by the website. If you attend the Company Shareholders’ Meeting and vote online during the meeting, your vote will revoke any proxy that you have previously submitted.
If your shares of our common stock are held in “street name” through a bank, broker, or other nominee, you may vote:
•through your bank, broker, or other nominee, by completing and returning the voting form provided by your bank, broker, or other nominee; or
•by attending the Company Shareholders’ Meeting and voting online with a “legal proxy” from your bank, broker, or other nominee; or
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•if such a service is provided by your bank, broker, or other nominee, electronically over the Internet or by telephone by the deadline provided by your bank, broker, or other nominee. To vote over the Internet or by telephone through your bank, broker, or other nominee, you should follow the instructions on the voting form provided by your bank, broker, or other nominee.
Even if you plan to attend the Company Shareholders’ Meeting virtually, you are strongly encouraged to vote your shares of our common stock by proxy. If you are a record holder or if you obtain a “legal proxy” to vote your shares of our common stock that you beneficially own, you may still vote your shares of our common stock online at the Company Shareholders’ Meeting even if you have previously voted by proxy. If you are present at the Company Shareholders’ Meeting virtually and vote online during the Company Shareholders’ Meeting, your vote will revoke any proxy that you have previously submitted.
Q:If my broker holds my shares of Smartsheet common stock in “street name,” will my broker vote my shares of Smartsheet common stock for me?
A:No. Your bank, broker, or other nominee is only permitted to vote your shares of our common stock on any proposal currently scheduled to be considered at the Company Shareholders’ Meeting if you instruct your bank, broker, or other nominee how to vote. You should follow the procedures provided by your bank, broker, or other nominee to vote your shares of our common stock. Without instructions, your shares of our common stock will not be voted on such proposals, which will have the same effect as if you voted “AGAINST” the Merger Proposal, but, assuming a quorum is present at the Company Shareholders’ Meeting, will have no effect on the Compensation Proposal or Adjournment Proposal.
Q:May I change my vote after I have mailed my signed proxy card or voted over the Internet or by telephone prior to the Company Shareholders’ Meeting?
A:Yes. After you have mailed your signed proxy card or voted over the Internet or by telephone prior to the Company Shareholders’ Meeting, you may still change your vote and revoke your proxy by doing any one of the following things:
•voting online at the Company Shareholders’ Meeting;
•submitting a new proxy by telephone prior to 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting;
•submitting a new proxy over the Internet until 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting by following the instructions on the proxy card;
•signing a new proxy card with a date later than the date of the previously submitted proxy card and returning it to us by mail, which must be received prior to the Company Shareholders’ Meeting; or
•giving our Corporate Secretary a written notice that you want to revoke your proxy via mail at 500 108th Ave NE, Suite 200, Bellevue, WA 98004 prior to 11:59 p.m. Pacific Time on the day preceding the Company Shareholders’ Meeting.
Your attendance at the Company Shareholders’ Meeting alone will not revoke your proxy.
Q:What is a proxy?
A:A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of our common stock. The written document describing the matters to be considered and voted on at the Company Shareholders’ Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of our common stock is called a “proxy card.” Our Board of Directors has designated Mark P. Mader, our President, Chief Executive Officer and Director and Jolene Marshall, our Chief Legal Officer and Secretary,
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and each or any of them, with full power of substitution, as the proxy holders for the Company Shareholders’ Meeting.
Q:If a shareholder gives a proxy, how are the shares of Smartsheet common stock voted?
A:Regardless of the method you choose to vote, the proxy holders will vote your shares of our common stock in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares of our common stock should be voted “FOR” or “AGAINST” or to abstain from voting on all, some or none of the specific items of business to come before the Company Shareholders’ Meeting. If you properly sign your proxy card but do not mark the boxes showing how your shares of our common stock should be voted on a matter, the shares of our common stock represented by your properly signed proxy will be voted (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
Q:What should I do if I receive more than one set of voting materials?
A:You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares of our common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of our common stock. If you are a shareholder of record and your shares of our common stock are registered in more than one name, you will receive more than one proxy card. Please sign, date, and return (or grant your proxy electronically over the Internet or by telephone) each proxy card and voting instruction card that you receive, in order to vote all of our shares of common stock that you own.
Q:Am I entitled to exercise dissenters’ rights under the WBCA instead of receiving the per share merger consideration for my shares of Smartsheet common stock?
A:Yes. Holders of Company common stock are entitled to assert dissenters’ rights in connection with the Merger. For additional information, please see the section of this proxy statement captioned “The Merger – Dissenters’ Rights.”
Q:Where can I find the voting results of the Company Shareholders’ Meeting?
A:If available, Smartsheet may announce preliminary voting results at the conclusion of the Company Shareholders’ Meeting. Smartsheet intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Company Shareholders’ Meeting. All reports that Smartsheet files with the SEC are publicly available when filed. See the section of this proxy statement captioned “Where You Can Find More Information.”
Q:Will I be subject to U.S. federal income tax upon the exchange of shares of Smartsheet common stock for cash pursuant to the Merger?
A:The receipt of cash by a U.S. Holder (which we define in the section of this proxy statement captioned “The Merger — U.S. Federal Income Tax Considerations of the Merger — U.S. Holders”) in exchange for such U.S. Holder’s shares of our common stock pursuant to the Merger generally will be a taxable transaction for U.S. federal income tax purposes. Such receipt of cash by such shareholder generally will result in the recognition of gain or loss in an amount measured by the difference, if any, between the amount of cash that such U.S. Holder receives in the Merger and such U.S. Holder’s adjusted tax basis in the shares of our common stock surrendered in the Merger (as further discussed in the section of this proxy statement captioned “The Merger — U.S. Federal Income Tax Considerations of the Merger”). The receipt of cash by a Non-U.S. Holder (which we define in the section of this proxy statement captioned “The Merger — U.S. Federal Income Tax Considerations of the Merger — Non-U.S. Holders”) in exchange for such Non-U.S. Holder’s shares of our common stock in the Merger generally will not be a taxable transaction for U.S. federal income tax purposes unless the Non-U.S. Holder has certain connections to the United States. A Non-U.S. Holder may be subject to backup withholding
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(at a rate currently equal to 24%) with respect to cash payments made pursuant to the Merger unless such Non-U.S. Holder certifies that it is not a U.S. person or otherwise establishes an exemption (as further discussed in the section of this proxy statement captioned “The Merger — U.S. Federal Income Tax Considerations of the Merger”). Smartsheet shareholders should consult their tax advisors in light of their particular circumstances and any specific tax consequences relating to the Merger, including U.S. federal, state, local, and non-U.S. income and other tax consequences.
Q:When do you expect the Merger to be completed?
A:We are working toward completing the Merger as quickly as possible and currently expect to complete the Merger in the fourth quarter of the Company’s fiscal year ending January 31, 2025. However, the exact timing of completion of the Merger, if it occurs at all, cannot be predicted because the Merger is subject to the closing conditions specified in the Merger Agreement, many of which are outside of our control. For more information, please see the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger.”
Q:Why am I being asked to consider and vote on the named executive officer Merger-related compensation proposal?
A:SEC rules require us to seek approval on a non-binding, advisory basis of certain compensation that will or may become payable to our named executive officers that is based on or otherwise relates to the Merger. Approval of the named executive officer Merger-related compensation proposal is not required to complete the Merger.
Q:Do any of Smartsheet’s directors or officers have interests in the Merger that may differ from those of Smartsheet shareholders generally?
A:Yes. In considering the recommendation of the Board of Directors with respect to the Merger Proposal, you should be aware that our directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of our shareholders generally. In (i) evaluating and negotiating the Merger Agreement, (ii) approving the Merger Agreement and the Merger, and (iii) recommending that Smartsheet’s shareholders approve the Merger Proposal, the Board of Directors was aware of and considered these interests to the extent that they existed at the time, among other matters. For more information, see the section of this proxy statement captioned “The Merger — Interests of Smartsheet’s Directors and Executive Officers in the Merger.”
Q:Who will solicit and pay the cost of soliciting proxies?
A:We have retained Innisfree M&A Incorporated, a proxy solicitation firm (which we refer to as the “Proxy Solicitor”), to solicit proxies in connection with the Company Shareholders’ Meeting at a cost of approximately $40,000, plus a success fee of $20,000 and expenses, as well as additional fees in certain circumstances. The expense of soliciting proxies will be borne by the Company. We will also indemnify the Proxy Solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers, and other nominees representing beneficial owners of shares of our common stock for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers, and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.
Q:What is householding and how does it affect me?
A:The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy materials with respect to two or more shareholders sharing the same address by delivering a single set of proxy materials addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. A single set of proxy materials will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders.
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We will promptly deliver a separate copy of these proxy materials to any shareholder upon request submitted in writing to us at our principal offices at Investor Relations, 500 108th Ave NE, Suite 200, Bellevue, WA 98004. You may also orally submit your request by calling 1 (844) 324-2360.
If two or more shareholders sharing the same address are currently receiving multiple copies of proxy materials and would like to receive only one copy for their household, the shareholders should contact their bank, broker, or other nominee record holder, or contact us as instructed above.
Q:What if there are technical difficulties during the Annual Meeting?
A:If we experience technical difficulties during the virtual meeting (e.g., a temporary or prolonged power outage), the Company Shareholders’ Meeting chair will determine whether the Company Shareholders’ Meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the Company Shareholders’ Meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged).
Shareholders experiencing technical difficulties accessing the meeting may visit https://go.lumiglobal.com/faq for assistance.
Q:Who can help answer my questions?
A:If you have any questions concerning the Merger, the Company Shareholders’ Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of our common stock, please contact our Proxy Solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: +1 (877) 750-0510
Banks & Brokers May Call Collect: +1 (212) 750-5833
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FORWARD-LOOKING STATEMENTS
This proxy statement includes certain “forward-looking statements” intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995, as amended, including, but not limited to, statements regarding the proposed transactions. Forward-looking statements may be identified by the words “intend,” “plan,” “should,” “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “believe,” “will,” and similar expressions, are based on Smartsheet’s current expectations, and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Factors that could cause actual results and outcomes to differ include, but are not limited to, the following risks and uncertainties relating to the proposed transactions: the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement; uncertainties as to the satisfaction of closing conditions under the Merger Agreement on a timely basis or at all, including the ability to obtain required regulatory and shareholder approvals; uncertainties as to the timing of the transactions; the possibility that competing offers will be made; litigation relating to the transactions; the impact of the Merger on Smartsheet’s business operations; incurrence of unexpected costs and expenses in connection with the transactions; financial or other setbacks if the Merger encounters unanticipated problems; and the risks that the proposed transactions divert management’s attention from Smartsheet’s ongoing business operations.
Other important factors that could cause actual results and outcomes to differ materially from those expressed or implied include, but are not limited to, risks related to: (i) the ability to obtain the requisite approval from shareholders of Smartsheet; (ii) the risk that the proposed transaction may not be completed in a timely manner or at all; (iii) the possibility that competing offers or acquisition proposals for Smartsheet will be made; (iv) the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including in circumstances that would require Smartsheet to pay a termination fee or other expenses; (vi) the effect of the pendency of the proposed transaction on Smartsheet’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers, and others with whom it does business, its business generally or its stock price; (vii) risks related to diverting management’s attention from Smartsheet’s ongoing business operations or the loss of one or more members of the management team; (viii) the risk that shareholder litigation in connection with the proposed transaction may result in significant costs of defense, indemnification, and liability; (ix) Smartsheet’s ability to achieve future growth and sustain its growth rate; (x) Smartsheet’s ability to attract and retain talent; (xi) Smartsheet’s ability to attract and retain customers (including government customers) and increase sales to its customers; (xii) Smartsheet’s ability to develop and release new products and services and to scale its platform; (xiii) Smartsheet’s ability to increase adoption of its platform through our self-service model; (xiv) Smartsheet’s ability to maintain and grow its relationships with channel and strategic partners; (xv) the highly competitive and rapidly evolving market in which it participates; (xvi) Smartsheet’s ability to identify targets for, execute on, or realize the benefits of, potential acquisitions; and (xvii) its international expansion strategies. Further information on risks that could affect Smartsheet’s results is included in its filings with the SEC, including its most recent Quarterly Report on Form 10-Q and its Annual Report on Form 10-K for the fiscal year ended January 31, 2024, and any current reports on Form 8-K that it may file from time to time. Should any of these risks or uncertainties materialize, actual results could differ materially from expectations. Except as required by applicable law, Smartsheet assumes no obligation to, and does not currently intend to, update or supplement any such forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date of this communication.
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THE COMPANY SHAREHOLDERS’ MEETING
The enclosed proxy is solicited on behalf of the Board of Directors for use at the Company Shareholders’ Meeting.
Date, Time, and Place
We will hold the Company Shareholders’ Meeting on December 9, 2024, at 10:00 a.m., Pacific Time (unless the Company Shareholders’ Meeting is adjourned or postponed). You can virtually attend, and vote in the Company Shareholders’ Meeting by accessing a virtual live website using the Internet at www.virtualshareholdermeeting.com/SMAR2024SM. Please note that you will not be able to attend the Company Shareholders’ Meeting physically in person. Instructions on how to attend and participate online are provided on the proxy card. We expect check-in to be available starting around 9:45 a.m., Pacific Time, on the day of the Company Shareholders’ Meeting, December 9, 2024, and you should allow ample time for online check-in proceedings. We will have technicians standing by and ready to assist you with any technical difficulties you may have in accessing the virtual live webcast. If you encounter any difficulties accessing the virtual live webcast during the check-in or meeting time, please call the support team at 1-844-986-0822 (toll free) or 303-562-9302 (international).
Purpose of the Company Shareholders’ Meeting
At the Company Shareholders’ Meeting, we will ask shareholders to vote to approve (i) the Merger Proposal, (ii) the Compensation Proposal, and (iii) the Adjournment Proposal.
Record Date; Shares Entitled to Vote; Quorum
Only shareholders of record as of the Record Date are entitled to notice of the Company Shareholders’ Meeting and to vote at the Company Shareholders’ Meeting. As of the Record Date, there were 139,300,914 shares of our common stock outstanding and entitled to vote at the Company Shareholders’ Meeting. A complete list of registered shareholders as of the close of business on the Record Date will be available for inspection by shareholders of record 10 days prior to the Company Shareholders’ Meeting for any purpose germane to the meeting, between the hours of 9:00 a.m. and 4:30 p.m. Pacific Time at 500 108th Ave NE, Suite 200, Bellevue, WA 98004 and during the entirety of the Company Shareholders’ Meeting online at www.virtualshareholdermeeting.com/SMAR2024SM. The list of shareholders will also be made available for inspection upon request via email to our Investor Relations Department at investorrelations@smartsheet.com (subject to satisfactory verification of shareholder status).
The shareholders holding at least a majority of the total voting power of all outstanding shares of common stock present at the Company Shareholders’ Meeting via the virtual meeting website or represented by proxy and entitled to vote thereat will constitute a quorum at the Company Shareholders’ Meeting. In the event that a quorum is not present at the Company Shareholders’ Meeting, it is expected that the meeting will be adjourned to solicit additional votes.
Votes Required; Abstentions and Broker Non-Votes
Each Smartsheet shareholder will be entitled to one vote for each share of our common stock that such shareholder owns at the close of business on the Record Date on each proposal to be acted upon at the Company Shareholders’ Meeting. The approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock entitled to vote as of the close of business on the Record Date. As of the Record Date, 69,650,458 votes constitute a majority of the issued and outstanding shares of our common stock entitled to vote on the Merger Proposal. Shares deemed not in attendance at the Company Shareholders’ Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker, or other nominee), abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Merger Proposal. Approval of the Merger Proposal by our shareholders is a condition to the closing of the Transactions.
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The approval of the Compensation Proposal requires the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matters that are present in person or represented by proxy at the meeting. Accordingly, shares deemed not in attendance at the Company Shareholders’ Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker, or other nominee) and broker non-votes will have no effect on the outcome of the Compensation Proposal. Abstentions will also have no effect on the Compensation Proposal.
The approval of the Adjournment Proposal, if necessary or appropriate, requires the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matters that are present in person or represented by proxy at the meeting. Accordingly, shares deemed not in attendance at the Company Shareholders’ Meeting (whether due to a record holder’s failure to vote or a “street name” holder’s failure to provide any voting instructions to such holder’s bank, broker, or other nominee) and broker non-votes will have no effect on the outcome of the Adjournment Proposal. Abstentions will also have no effect on the Adjournment Proposal.
If you fail to (i) return your signed proxy card; (ii) grant your proxy electronically over the Internet or by telephone; or (iii) attend the Company Shareholders’ Meeting and vote online during the meeting, your shares of our common stock will not be counted for purposes of determining whether a quorum is present at the Company Shareholders’ Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Compensation Proposal and the Adjournment Proposal.
The rules applicable to banks, brokers, and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, but each of the proposals to be presented at the Company Shareholders’ Meeting is considered non-routine. As a result, no broker will be permitted to vote your shares of our common stock at the Company Shareholders’ Meeting without receiving instructions. Failure to instruct your broker on how to vote your shares of our common stock will have the same effect as a vote “AGAINST” the Merger Proposal, but, assuming a quorum is present at the Company Shareholders’ Meeting, will not have any effect on the Compensation Proposal and Adjournment Proposal.
Shares of our Common Stock Held by Smartsheet’s Directors and Executive Officers
As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, 1,713,716 shares of our common stock, representing approximately 1.2% of the shares of our common stock outstanding on the Record Date.
We currently expect that our directors and executive officers will vote all of their respective shares of our common stock: (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
Voting and Proxies
If you are a shareholder of record (that is, if your shares of our common stock are registered in your name with our Transfer Agent), there are four ways to vote:
•You may vote over the Internet prior to the Company Shareholders’ Meeting. You may vote your shares of our common stock over the Internet at www.proxyvote.com until 11:59 p.m., Eastern Time, on the day preceding the Company Shareholders’ Meeting by following the instructions on the proxy card. If you vote over the Internet prior to the Company Shareholders’ Meeting, you do not need to vote during the Company Shareholders’ Meeting or by telephone or by mail.
•You may vote by telephone prior to the Company Shareholders’ Meeting. You may vote your shares of our common stock by calling 1 (800) 690-6903 until 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting. If you vote by telephone, you do not need to vote over the Internet or by mail.
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•You may vote by mail prior to the Company Shareholders’ Meeting. If you wish to vote your shares of our common stock by mail, please sign, date, and return the enclosed proxy card in the accompanying prepaid reply envelope. If you vote by mail, you do not need to vote over the Internet or by telephone and your mailing must be received prior to the Company Shareholders’ Meeting.
•You may vote over the Internet during the Company Shareholders’ Meeting. You may vote your shares of our common stock over the Internet during the Company Shareholders’ Meeting by accessing the Company Shareholders’ Meeting website by following the instructions provided on the proxy card.
You can then cast your votes by following the prompts provided by the website. If you attend the Company Shareholders’ Meeting and vote online during the meeting, your vote will revoke any proxy that you have previously submitted.
You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the Internet or by telephone. Based on your proxy cards or Internet and telephone proxies, the proxy holders will vote your shares of our common stock according to your directions.
Voting instructions are included on your proxy card. All shares of our common stock represented by properly signed and dated proxies received in time for the Company Shareholders’ Meeting will be voted at the Company Shareholders’ Meeting in accordance with the instructions of the shareholder. Properly signed and dated proxies that do not contain voting instructions will be voted (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
If you are a beneficial owner and your shares of our common stock are held in “street name” through a bank, broker, or other nominee, you may vote:
•through your bank, broker, or other nominee by completing and returning the voting form provided by your bank, broker, or other nominee; or
•by attending the Company Shareholders’ Meeting and voting online with a “legal proxy” from your bank, broker, or other nominee; or
•if such a service is provided by your bank, broker, or other nominee, electronically over the Internet or by telephone by the deadline provided by your bank, broker, or other nominee. To vote over the Internet or by telephone through your bank, broker, or other nominee, you should follow the instructions on the voting form provided by your bank, broker, or other nominee.
If you do not return your bank’s, broker’s, or other nominee’s voting form, do not vote via the Internet or telephone through your bank, broker, or other nominee, if possible, or do not attend the Company Shareholders’ Meeting and vote online with a “legal proxy” from your bank, broker, or other nominee, it will have the same effect as if you voted “AGAINST” the Merger Proposal, but, assuming a quorum is present at the Company Shareholders’ Meeting, will not have any effect on the Compensation Proposal or Adjournment Proposal.
Even if you plan to attend the Company Shareholders’ Meeting virtually, you are strongly encouraged to vote your shares of our common stock by proxy. If you are a record holder or if you obtain a “legal proxy” to vote your shares of our common stock that you beneficially own, you may still vote your shares of our common stock online at the Company Shareholders’ Meeting even if you have previously voted by proxy. If you are present at the Company Shareholders’ Meeting virtually and vote online during the Company Shareholders’ Meeting, your previous vote by proxy will not be counted.
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Revocability of Proxies
If you are a shareholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Company Shareholders’ Meeting by:
•voting online at the Company Shareholders’ Meeting;
•submitting a new proxy by telephone prior to 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting;
•submitting a new proxy over the Internet until 11:59 p.m., Eastern Time on the day preceding the Company Shareholders’ Meeting by following the instructions on the proxy card;
•signing a new proxy card with a date later than the date of the previously submitted proxy card and returning it to us by mail, which must be received prior to the Company Shareholders’ Meeting; or
•giving our Corporate Secretary a written notice that you want to revoke your proxy via mail at 500 108th Ave NE, Suite 200, Bellevue, Washington 98004 prior to 11:59 p.m., Pacific Time on the day preceding the Company Shareholders’ Meeting.
If you have submitted a proxy, your appearance at the Company Shareholders’ Meeting virtually, in the absence of voting online during the Company Shareholders’ Meeting or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.
If you are a beneficial owner and hold your shares of our common stock in “street name,” you should contact your bank, broker, or other nominee for instructions regarding how to change your vote. You may also vote online at the Company Shareholders’ Meeting if you obtain a “legal proxy” from your bank, broker, or other nominee.
Any adjournment, postponement or other delay of the Company Shareholders’ Meeting, including for the purpose of soliciting additional proxies, will allow shareholders who have already sent in their proxies to revoke them at any time prior to their use at the Company Shareholders’ Meeting as adjourned, postponed, or delayed.
Board of Directors’ Recommendation
The Board of Directors, after careful consideration, including considering various factors described in the section of this proxy statement captioned “The Merger — Recommendation of the Board of Directors and Reasons for the Merger,” has unanimously (i) determined that it is in the best interests of Smartsheet and Smartsheet’s shareholders, and declared it advisable, to enter into the Merger Agreement; (ii) approved the execution, delivery, and performance of the Merger Agreement and the consummation of the Transactions, including the Merger, with Smartsheet surviving the Merger as a wholly owned subsidiary of Parent, in accordance with the WBCA; (iii) resolved to recommend that Smartsheet’s shareholders approve the Merger Agreement; and (iv) directed that the Merger Agreement be submitted to Smartsheet’s shareholders at the Company Shareholders’ Meeting for their approval.
The Board of Directors unanimously recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
Solicitation of Proxies
The expense of soliciting proxies will be borne by Smartsheet. We have retained Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies in connection with the Company Shareholders’ Meeting at a cost of approximately $40,000, plus a success fee of $20,000 and expenses, as well as additional fees in certain circumstances. We will also indemnify the Proxy Solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers, and other nominees representing beneficial
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owners of shares of our common stock for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers, and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.
Anticipated Date of Completion of the Merger
Assuming timely satisfaction of necessary closing conditions, including the approval by our shareholders of the Merger Proposal, we anticipate, but cannot guarantee, that the Merger will be consummated in the fourth quarter of the Company’s fiscal year ending on January 31, 2025.
Other Matters
At this time, we know of no other matters to be voted on at the Company Shareholders’ Meeting. If any other matters properly come before the Company Shareholders’ Meeting, your shares of our common stock will be voted in accordance with the discretion of the appointed proxy holders.
Householding of Company Shareholders’ Meeting Materials
The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy materials with respect to two or more shareholders sharing the same address by delivering a single set of proxy materials addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. A single set of proxy materials will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders.
We will promptly deliver a separate copy of these proxy materials to any shareholder upon request submitted in writing to us at our principal offices at Investor Relations, 500 108th Ave NE, Suite 200, Bellevue, Washington 98004.
If two or more shareholders sharing the same address are currently receiving multiple copies of proxy materials and would like to receive only one copy for their household, the shareholders should contact their bank, broker, or other nominee record holder, or contact us as instructed above.
Questions and Additional Information
If you have any questions concerning the Merger, the Company Shareholders’ Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of our common stock, please contact our Proxy Solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: +1 (877) 750-0510
Banks & Brokers May Call Collect: +1 (212) 750-5833 
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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT
We are asking you to adopt the Merger Agreement pursuant to which Merger Sub will merge with and into Smartsheet, whereupon the separate corporate existence of Merger Sub shall cease, and Smartsheet will become a wholly owned subsidiary of Parent.
For a summary of and detailed information regarding this proposal, see the information about the Merger Agreement and the Merger throughout this proxy statement, including the information set forth in the sections of this proxy statement captioned “The Merger” and “The Merger Agreement.” This summary does not purport to be complete and may not contain all of the information about the Merger that is important to you. A copy of the Merger Agreement is attached to this proxy statement as Annex A. You are urged to read the Merger Agreement carefully in its entirety.
Under applicable law, we cannot complete the Merger without the affirmative vote in favor of this Merger Proposal by the holders of a majority of the total issued and outstanding shares of our common stock as of the Record Date. If you abstain from voting, fail to cast your vote (online during the Company Shareholders’ Meeting or by proxy), or fail to give voting instructions to your brokerage firm, bank, trust, or other nominee, it will have the same effect as a vote against the Merger Proposal.
The Board of Directors unanimously recommends that you vote “FOR” this proposal.
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PROPOSAL 2: COMPENSATION PAID TO NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER
In accordance with Section 14A of the Exchange Act, we are asking you to approve a proposal to cast an advisory (non-binding) vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the proposed Merger. For more detailed information regarding these amounts, please see the section captioned “The Merger—Quantification of Potential Payments and Benefits to our Named Executive Officers” and the accompanying footnotes and related narrative disclosure in the section captioned “The Merger—Interests of Smartsheet’s Directors and Executive Officers in the Merger.” As required by those rules, we are asking our shareholders to adopt the following resolution:
RESOLVED, that the shareholders of Smartsheet hereby APPROVE, on an advisory basis, the compensation that may be paid or become payable to Smartsheet’s named executive officers in connection with the Merger, in each case pursuant to Item 402(t) of Regulation S-K, described in the table in the section captioned “The Merger — Quantification of Potential Payments and Benefits to our Named Executive Officers” and the accompanying footnotes and related narrative discussion of Smartsheet’s proxy statement for its virtual special meeting of shareholders to be held on December 9, 2024.
Effect of Advisory Vote
The vote on this proposal is a vote separate from the votes on the proposal to adopt the Merger Agreement and the proposal to approve adjournment of the virtual special meeting. Accordingly, you may vote to approve either of the other proposals and vote not to approve this proposal, and vice versa. Approval of this proposal is not a condition to completion of the Merger.
Because the vote on this proposal is only advisory in nature, it will not be binding on either Smartsheet or Parent regardless of whether the proposed Merger is completed. Further, since the underlying compensation plans and arrangements described herein are contractual in nature, such compensation may be payable regardless of the outcome of this advisory vote, subject only to the terms and conditions applicable thereto, if the proposed Merger is completed.
The Board of Directors unanimously recommends that you vote “FOR” this proposal.
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PROPOSAL 3: ADJOURNMENT OF THE COMPANY SHAREHOLDERS’ MEETING
We are asking you to approve a proposal to adjourn the Company Shareholders’ Meeting to a later date or dates as provided in the Merger Agreement, if necessary or appropriate, including to solicit additional votes if there are insufficient votes to adopt the Merger Agreement at the time of the Company Shareholders’ Meeting. If shareholders approve this Adjournment Proposal, we could adjourn the Company Shareholders’ Meeting and any adjourned session of the Company Shareholders’ Meeting and use the additional time to solicit additional votes, including proxies from shareholders that have previously returned properly executed proxies voting against approval of the Merger Proposal. Among other things, approval of the Adjournment Proposal could mean that, even if we had received proxies representing a sufficient number of votes against approval of the Merger Proposal such that the proposal to adopt the Merger Agreement would be defeated, we could adjourn the Company Shareholders’ Meeting without a vote on the approval of the Merger Proposal and seek to convince the shareholders of those shares of our common stock to change their votes to votes in favor of approval of the Merger Proposal. Additionally, we could seek to adjourn the Company Shareholders’ Meeting if a quorum is not present or otherwise at the discretion of the chairman of the Company Shareholders’ Meeting.
We do not anticipate calling a vote on this proposal if the Merger Proposal is approved by the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock as of the Record Date.
The Board of Directors unanimously recommends that you vote “FOR” this proposal.
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THE MERGER
This discussion of the Merger Agreement and the Merger in this proxy statement is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A. You should read and consider the Merger Agreement, which is the legal document that governs the Merger, carefully and in its entirety.
Parties Involved in the Merger
Smartsheet Inc.
500 108th Ave NE, Suite 200
Bellevue, Washington 98004
(844) 324-2360 
Smartsheet, the enterprise work management platform, empowers organizations to innovate and achieve results quickly and securely at scale through effective collaboration and streamlined workflows. By uniting people, content, and work, Smartsheet provides powerful capabilities that revolutionize the way teams operate. Smartsheet makes outcomes reliable, keeps customer data safe, and ensures users are aligned, making it ideal for organizations seeking efficient, impactful collaborative work management. Smartsheet’s principal executive offices are located at 500 108th Ave NE, Suite 200, Bellevue, Washington 98004, and its telephone number is (844) 324-2360. Smartsheet maintains a website at www.smartsheet.com. Information included on or accessible through Smartsheet’s website does not constitute a part of this proxy statement and, therefore, is not incorporated herein by reference.
Smartsheet’s common stock is listed on NYSE under the symbol “SMAR.”
Einstein Parent, Inc.
Four Embarcadero Center, 20th Floor
San Francisco, California 94111
(415) 765-6500 
Parent is a Delaware corporation that was formed solely for the purpose of entering into the Merger Agreement and consummating the Transactions. Parent has not conducted any business operations other than in connection with its formation, the maintenance of its existence, and the Transactions.
Parent’s principal executive offices are located at Four Embarcadero Center, 20th Floor, San Francisco, California 94111, and its telephone number is (415) 765-6500. 
Einstein Merger Sub, Inc.
Four Embarcadero Center, 20th Floor
San Francisco, California 94111
(415) 765-6500 
Merger Sub is a Washington corporation and a wholly owned subsidiary of Parent that was formed solely for the purpose of entering into the Merger Agreement and consummating the Transactions. Merger Sub has not conducted any business operations other than in connection with its formation, the maintenance of its existence, and the Transactions. Upon the consummation of the Transactions, Merger Sub will cease to exist.
Merger Sub’s principal executive offices are located at Four Embarcadero Center, 20th Floor, San Francisco, California 94111, and its telephone number is (415) 765-6500. 
Blackstone Inc.
345 Park Avenue
New York, New York 10154
(212) 583-5000 
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Parent and Merger Sub are each affiliated with Blackstone. In connection with the Transactions, Blackstone has committed to provide Parent, at or prior to the Closing, with an aggregate cash amount of up to $2,105,000,000, which will be available, together with the other Equity Financing Commitments, available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing, to fund the aggregate Merger Consideration (including payments in respect of Smartsheet’s outstanding equity-based awards payable in connection with the Closing of the Merger pursuant to the Merger Agreement ) and to pay the fees and expenses required to be paid in connection with the Closing by Parent and Merger Sub, as described further in this proxy statement under the caption “The Merger — Financing of the Merger; Damages Commitment.”
Blackstone Inc.’s principal executive offices are located at 345 Park Avenue, New York, New York 10154, and its telephone number is (212) 583-5000. 
Blackstone Inc. is one of the world’s leading investment firms.
Vista Equity Partners Management, LLC
Four Embarcadero Center, 20th Floor
San Francisco, California 94111
(415) 765-6500 
Parent and Merger Sub are each affiliated with VEPF VIII. In connection with the Transactions, VEPF VIII has committed to provide Parent, at or prior to the Closing, with an aggregate cash amount of up to $1,753,000,000, which will be available, together with the other Equity Financing Commitments, available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing, to fund the aggregate Merger Consideration (including payments in respect of Smartsheet’s outstanding equity-based awards payable in connection with the Closing of the Merger pursuant to the Merger Agreement ) and to pay the fees and expenses required to be paid in connection with the Closing by Parent and Merger Sub, as described further in this proxy statement under the caption “The Merger — Financing of the Merger; Damages Commitment.”
VEPF VIII’s principal executive offices are located at Four Embarcadero Center, 20th Floor, San Francisco, California 94111, and its telephone number is (415) 765-6500. 
VEPF VIII, Parent, and Merger Sub are each affiliates of Vista Equity Partners. Vista Equity Partners is a leading private equity firm focused on investments in software, data, and technology-enabled companies.
Platinum Falcon B 2018 RSC Limited
Al Khatem Tower, 26th Floor
Abu Dhabi Global Market Square
Al Maryah Island, PO Box 25642
Abu Dhabi, United Arab Emirates
In connection with the Transactions, Platinum Falcon has committed to provide Parent, at or prior to the Closing, with an aggregate cash amount of up to $900,000,000, which will be available, together with the other Equity Financing Commitments, available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing, to fund the aggregate Merger Consideration (including payments in respect of Smartsheet’s outstanding equity-based awards payable in connection with the Closing of the Merger pursuant to the Merger Agreement ) and to pay the fees and expenses required to be paid in connection with the Closing by Parent and Merger Sub, as described further in this proxy statement under the caption “The Merger — Financing of the Merger; Damages Commitment.”
Platinum Falcon’s principal executive office is located at Al Khatem Tower, 26th Floor, Abu Dhabi Global Market Square, Al Maryah Island, PO Box 25642, Abu Dhabi, United Arab Emirates, and its telephone number is +971 2 415 0000. 
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Platinum Falcon is an indirect wholly owned subsidiary of ADIA. ADIA is a public institution established as an independent investment institution in 1976 by the Government of the Emirate of Abu Dhabi.
Effect of the Merger
Upon the terms and subject to the conditions of the Merger Agreement, if the Merger is completed, at the Effective Time, Merger Sub will merge with and into Smartsheet, whereupon the separate corporate existence of Merger Sub shall cease, and Smartsheet will continue its corporate existence under Washington Law as the Surviving Corporation and a wholly owned subsidiary of Parent. As a result of the Merger, our common stock will no longer be publicly traded, will be delisted from NYSE, and will be deregistered under the Exchange Act, and Smartsheet will no longer file periodic reports with the SEC on account of Smartsheet common stock. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation.
The Effective Time will occur upon the filing and acceptance of the certificate of merger with the Secretary of State of the State of Washington, or at such later date and time as is agreed upon in writing by the parties and specified in the certificate of merger.
Effect on Smartsheet if the Merger is Not Completed
If the Merger Agreement is not adopted by our shareholders or if the Merger is not completed for any other reason:
•shareholders will not be entitled to receive, and will not receive, any payment for their respective shares of our common stock in connection with the Merger;
•(i) Smartsheet will remain an independent public company, (ii) our common stock will continue to be listed and traded on NYSE and registered under the Exchange Act, and (iii) we will continue to file periodic reports with the SEC on account of Smartsheet common stock;
•we anticipate that (i) management will operate our business in a manner similar to that in which it is being operated today, and (ii) our shareholders will be subject to similar types of risks and uncertainties as those to which they are currently subject, including, without limitation, risks and uncertainties with respect to our business, prospects, and results of operations, as such may be affected by, among other things, the highly competitive industry in which Smartsheet operates and risks related to adverse economic conditions;
•the Board of Directors will continue to evaluate and review our business operations, strategic direction, and capitalization, among other things, and will make such changes as are deemed appropriate (irrespective of these efforts, it is possible that no other transaction acceptable to the Board of Directors will be offered or that our business, prospects, or results of operations will be adversely impacted) and continue to seek to identify strategic alternatives to enhance shareholder value;
•upon termination of the Merger Agreement under specified circumstances, Smartsheet will be required to pay to Parent a termination fee of $250,000,000 (or $125,000,000 in the case of termination under specified circumstances during the Go-Shop Period), or Parent will be required to pay to Smartsheet a termination fee of $500,000,000. For more information please see the section of this proxy statement captioned “The Merger Agreement — Expenses — Termination Fees”;
•the price of our common stock may decline significantly and if that were to occur, it is uncertain when, if ever, the price of our common stock would return to the price at which it trades as of the date of this proxy statement; and
•due to the fact that the Closing of the Merger has not yet occurred, shareholders do not yet have the ability to exercise any dissenters’ rights.
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Accordingly, if the Merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of the shares of our common stock. If the Merger is not completed, the Board of Directors will continue to evaluate and review Smartsheet’s business operations, strategic direction, and capitalization, among other things, and will make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the Merger Agreement is not adopted by our shareholders or if the Merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to the Board of Directors will be offered or that Smartsheet’s business, prospects, or results of operation will not be adversely impacted.
Merger Consideration
At the Effective Time, by virtue of the Merger, each outstanding share of our common stock (other than the Canceled Shares and the Dissenting Shares) shall be automatically converted into the right to receive the Merger Consideration, without interest (and after giving effect to any required tax withholdings).
After the Merger is completed, you will have the right to receive the Merger Consideration in respect of each share of common stock that you own, but you will no longer have any rights as a shareholder (except that Smartsheet shareholders who properly exercise, and do not subsequently withdraw, fail to perfect, or lose, their appraisal rights will have the right to receive a payment of the “fair value” of their shares of our common stock as determined pursuant to an appraisal proceeding as contemplated by Chapter 23B.13 of the WBCA, as described in the section of this proxy statement captioned “— Dissenters’ Rights”).
Background of the Merger
The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalog every conversation among or between the Board of Directors, the Transaction Committee, our representatives and other parties.
As part of our ongoing consideration and evaluation of Smartsheet’s long-term strategic goals and plans, the Board of Directors and our senior management periodically review our operations and financial performance, as well as overall industry conditions, and their effect on those strategic goals and plans. This review has included, among other things, the consideration of potential opportunities for business combinations, acquisitions and other financial and strategic alternatives, in each case, with a view towards enhancing shareholder value. In addition, Smartsheet has from time to time received unsolicited inquiries from financial sponsors that were interested in exploring a potential acquisition of our company.
On June 12, 2023 and June 20, 2023, Mark Mader, our Chief Executive Officer, met separately with representatives of Blackstone and Vista, respectively, (which we refer to collectively as the “Consortium”), during which they discussed aspects of our business and strategic opportunities. Mr. Mader informed the members of the Board of Directors of these discussions. Vista and Blackstone had not yet formed the Consortium at the time of these initial meetings nor had discussions with each other about jointly pursuing a deal with our company.
In August 2023, Mr. Mader met with a representative of another financial sponsor (“Party A”), during which the representative provided background on Party A, and Mr. Mader and the representative discussed our business.
In August 2023 and again in September 2023, Mr. Mader met with a representative of Vista to discuss aspects of our business.
On December 5, 2023, the Board of Directors held a regularly scheduled meeting at which members of our senior management and, at the invitation of the Board of Directors, representatives of Qatalyst Partners and another investment bank were each present for different portions of the meeting. Each of Qatalyst Partners and the other investment bank discussed the collaborative work management market and considerations related to strategic transactions in our industry with the Board of Directors.
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On January 21, 2024, representatives of the Consortium called Mr. Mader. During the call, the representatives stated that they both were very interested in acquiring our company, and informed Mr. Mader that he may receive a written proposal from them in the near future.
On January 23, 2024, the Board of Directors held a meeting at which members of our senior management and, at the invitation of the Board of Directors, representatives of Qatalyst Partners and Fenwick & West LLP, our outside legal counsel (“Fenwick”), were present. The Board of Directors invited Qatalyst Partners to join the meeting based on its extensive expertise, knowledge of the industry in which our company operates and experience advising technology companies in connection with potential strategic transactions, Representatives of Qatalyst Partners then discussed preliminary market perspectives on potential strategic alternatives. At this meeting, Mr. Mader reviewed with the Board of Directors his January 21st discussion with representatives of the Consortium.
On January 24, 2024, the Consortium submitted a non-binding indication of interest to acquire all of the outstanding shares of our common stock for $56.25 per share in cash (the “January 24 Proposal”), subject to customary due diligence. The proposed price per share represented a premium of approximately 21% over $46.41, the closing price for shares of our common stock on the NYSE on such date.
On January 25, 2024, the Board of Directors held a meeting at which members of our senior management, Qatalyst Partners (for a portion of the meeting) and Fenwick were present. At this meeting, a representative of Fenwick reviewed with the Board of Directors its fiduciary duties in evaluating the January 24 Proposal. The Board of Directors and members of our senior management then reviewed a forecast of our financial results through fiscal year 2027, which had been prepared by our management in the ordinary course of business, and discussed opportunities and risks in executing our plan as an independent company. The representatives of Qatalyst Partners then joined the meeting, and the Board of Directors discussed the January 24 Proposal in light of our prospects as an independent company and analyst consensus estimates. The Board of Directors also discussed organizational changes and changes in our pricing and packaging model that had not yet been publicly announced, the anticipated timing for the transition of our existing business to this new model and the potential effect of these pending announcements on investors’ perceptions of our company. The Board of Directors then discussed the desirability of waiting until the announcement of these developments before considering a sale process. The Board of Directors also discussed the potential risks and benefits of engaging in substantive discussions with the Consortium at this time, including the risk that engaging in further discussions with the Consortium, or engaging in a broader outreach, could distract us from executing on our standalone plan. After the discussion, the Board of Directors determined to reject the January 24 Proposal, and instructed representatives of Qatalyst Partners to inform representatives of the Consortium that the January 24 Proposal was not sufficient for our company to engage in further discussions at that time. Representatives of Qatalyst Partners conveyed that message to representatives of the Consortium later that day as instructed by the Board of Directors.
On February 2, 2024, a representative of Blackstone called Mr. Mader to discuss Blackstone’s continued interest in our company.
On February 14, 2024, Mr. Mader had lunch with a representative of Party A at the invitation of Party A, during which they further discussed our business and Party A’s approach to investing in companies. Party A did not make any proposal to acquire our company at such time.
On March 14, 2024, after the close of trading on the NYSE, we announced our results of operations for the fourth quarter of our fiscal year 2024, delivering revenue, operating income, free cash flow, and net income above analyst consensus estimates, but guiding first quarter 2025 revenue below analyst consensus estimates. While fourth quarter 2024 year-over-year revenue growth was 21%, net bookings (an indicator of future revenue performance, which we define as gross bookings from new and returning customers and expansion from existing customers, less churn and contraction) declined by 19% year-over-year. We also announced changes to our executive leadership team, including the hiring of a new President, GTM and upcoming departures of our Chief Revenue Officer and Chief Marketing Officer. The next day, the closing price for shares of our common stock on the NYSE was $37.52, a 7% decline over the prior trading day.
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On March 25, 2024, a representative of Kirkland & Ellis LLP (“Kirkland”), outside counsel to Vista, notified us in writing that Vista had begun acquiring shares of our common stock through open market transactions, and that it intended to file a notification letter (as required under the HSR Act) with United States antitrust authorities on or about such date.
On March 26, 2024, Mr. Mader met with representatives of Vista to further discuss Vista’s March 25, 2024 letter notice that was sent to our company under the HSR Act.
On May 15, 2024, Vista and its affiliates publicly disclosed on their periodic Form 13F filing that their position, as of March 31, 2024, had increased from 363,271 shares to 2,122,800 shares, approximately 1.5% of our shares outstanding. This accumulation was noted by market analysts.
On June 5, 2024, following the close of trading on the NYSE, we announced our results for operations for the first quarter of our fiscal year of 2025. During the call, we announced significant changes in our pricing and packaging model. We also disclosed that our company delivered revenue, operating income, free cash flow, and net income above analyst consensus estimates and guiding second quarter 2025 revenue approximately in-line with analyst consensus estimates. While first quarter 2025 year-over-year revenue growth was 20%, net bookings (an indicator of future revenue performance) again declined 19% year-over-year. The next day, the price for shares of our common stock on the NYSE increased by 17%, closing at $44.27.
On June 18, 2024, Mr. Mader met with representatives of another financial sponsor (“Party B”) at the invitation of Party B, and discussed aspects of our business and Party’s B investment approach. Party B did not make any proposal to acquire our company at such time.
On June 24, 2024, Mr. Mader had dinner with representatives of the Consortium at their request. During the dinner, the representatives discussed our business, including market trends and dynamics, our management team and our recently announced changes in our pricing and packaging model, and the Consortium’s continued interest in pursuing an acquisition of our company. However, the representatives did not make any proposal to acquire our company at this meeting. Mr. Mader did not share, and the parties did not discuss, any of our company’s non-public information during this meeting.
On June 27, 2024, the Board of Directors held a meeting at which members of our senior management and representatives of Fenwick were present. At this meeting, Mr. Mader updated the Board of Directors on his conversations with members of the Consortium, including the June 24 dinner. A representative of Fenwick reviewed with the Board of Directors its fiduciary duties in connection with a potential acquisition transaction and considerations with respect to a process for such a transaction. The Board of Directors also discussed whether to engage Qatalyst Partners as our financial advisor with respect to a potential sale of our company and considered the terms of such an engagement. After the discussion, the Board of Directors approved the engagement of Qatalyst Partners as our financial advisor based on its extensive expertise, knowledge of the industry in which our company operates and experience advising technology companies in connection with potential strategic transactions. The Board of Directors also reviewed a forecast of our financial results through fiscal year 2027 (the “Three Year Forecast”), which had been prepared by our management in the ordinary course of business.
At the same meeting, the Board of Directors discussed establishing a committee of the Board of Directors to oversee our strategic process. After discussion, the Board of Directors approved the formation of a committee (the “Transaction Committee”), comprised of independent directors Mike Gregoire, Matt McIlwain, Katie Rooney and Khozema Shipchandler, to facilitate the Board of Directors’ active involvement in our company’s discussions and consideration of strategic alternatives, including potential negotiations with the Consortium (or any other party), but without authority to approve any transaction. The Transaction Committee was not created to address any actual or perceived conflict of interest, and the members of the Transaction Committee were not paid any additional compensation for serving on the Transaction Committee.
On June 28, 2024, we executed an engagement letter with Qatalyst Partners on the terms approved by the Board of Directors.
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On July 1, 2024, representatives of the Consortium informed representatives of Qatalyst Partners that the Consortium may submit a revised proposal to acquire our company after July 4, 2024.
On July 8, 2024, the Consortium submitted a non-binding indication of interest to acquire all the outstanding shares of our common stock for $56.50 per share in cash, subject to due diligence and the negotiation of a definitive acquisition agreement (the “July 8 Proposal”). The proposed per share consideration represented a premium of approximately 29% over the $43.73 closing price for shares of our common stock on that date, a 36% premium over our 30-day volume-weighted average price (“VWAP”) as of that date and a 40% premium over our 60-day VWAP as of that date. The July 8 Proposal provided that the acquisition would be financed with a combination of equity and debt financing from third-party lenders, with a substantial portion of the equity necessary coming from the Consortium, and the remainder being funded by select co-investors to be determined later. The July 8 Proposal also indicated that the Consortium was highly confident that it could obtain the requisite debt financing commitments prior to signing a definitive transaction agreement. In addition, the July 8 Proposal provided that the Consortium expected our company to agree to negotiate with the Consortium on an exclusive basis, but that they would be willing to include a “go-shop” provision in the definitive agreement. Finally, the July 8 Proposal indicated that it was not contingent on any individual signing an employment agreement before closing.
On the same day, representatives of Qatalyst Partners discussed the July 8 Proposal with representatives of the Consortium, including among other things the Consortium’s proposed sources of financing for the proposed transaction.
On July 9, 2024, the Transaction Committee held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners, and other members of the Board of Directors, were present. At this meeting, representatives of Qatalyst Partners summarized the July 8 Proposal, our stock performance since our initial public offering and its perspectives on the current market environment. Representatives of Qatalyst Partners also reviewed with the Board of Directors a preliminary analysis of the July 8 Proposal from a financial point of view, based on the Three Year Forecast. The Transaction Committee then considered, together with representatives of Qatalyst Partners and Fenwick, the response to the Consortium, and whether it would be in the best interests of our company and shareholders to approach other financial sponsors and strategic parties to determine their interest in pursuing an acquisition of our company. During these considerations, representatives of Fenwick advised the Transaction Committee on the fiduciary duties of directors in such a context, and members of management and representatives of Qatalyst Partners provided their perspectives on the financial sponsors and strategic parties that could have an interest in an acquisition of our company and would most likely have the ability to consummate a transaction of this size and nature, including based on the regulatory, financing, and other execution risks applicable to each party. The Transaction Committee noted that since the January 24 Proposal, our share price had declined 6%, the multiple that our share price represented of our next-12 months’ revenues based on analyst consensus estimates had declined 11%, our net bookings had continued to decline and that analyst consensus estimates for next-12 months’ revenue growth had declined from 19% to 16%. In the same period, the indexed share price and median revenue multiples of other comparable SaaS software companies had also declined. The Transaction Committee also discussed risks and opportunities we faced as an independent company including (i) the risks that our shareholders may not see the benefit of changes to our recently announced pricing and packaging model, or that such benefits may be delayed, (ii) the risks of successfully executing our recently announced go-to-market strategy, (iii) recent changes in our executive leadership, (iv) increasing competition from both existing competitors and entry by large, well-capitalized technology platforms, (v) the risks associated with sustained low levels of per seat spending within our customer base and (vi) the implications for future revenue growth of recent trends in key metrics including decreasing upsell activity, increasing downsell activity and declining net bookings. The Transaction Committee also considered (i) the fact that the July 8 Proposal presented the opportunity to negotiate a “go-shop” provision (i.e., the right to actively solicit alternative acquisition proposals for a specified period following execution of a definitive agreement) in the event that we were to enter into a definitive acquisition agreement with the Consortium, (ii) the risk that pursuing a sale process would distract our senior management from executing our strategic priorities to enhance shareholder value, and (iii) the risk that outreach could lead to media leaks and market speculation on the process that could have a negative impact on our business. After this discussion, the Transaction Committee determined that it would not enter into exclusive negotiations with the Consortium, and to approach Party A, Party B, one additional financial sponsor (“Party C”) and one strategic party (“Party D”) to
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determine their interest in submitting a proposal to acquire our company. The Transaction Committee selected these additional parties based on, among other things, their history of consummating acquisitions of a similar nature and the application of the criteria which had been discussed by the Transaction Committee earlier in the meeting. The Transaction Committee then directed Qatalyst Partners to inform the Consortium members that we would not agree to any exclusivity period during which we could not solicit alternative bids prior to execution of a definitive agreement, but that we would be willing to provide the Consortium members with access to non-public financial due diligence information and access to our senior management team, with the expectation that following such due diligence the Consortium would provide a revised proposal on July 26, 2024. The Transaction Committee also instructed Qatalyst Partners to invite the four additional parties to receive the same non-public financial due diligence information and evaluate making a proposal to acquire our company.
Later that day, representatives of Qatalyst Partners informed the Consortium members that we would not agree to any exclusivity period prior to execution of a definitive agreement, but that we would be willing to provide the Consortium members with access to non-public financial due diligence information and access to our senior management team, with the expectation that following such due diligence, the Consortium would provide a revised proposal on July 26, 2024 thereafter. In addition, later that day, representatives of Qatalyst Partners contacted each of the four additional parties to determine whether they would be interested in evaluating an acquisition of our company. Representatives of Party A and Party B spoke with representatives of Qatalyst Partners and expressed an interest in evaluating such a transaction.
On July 11, 2024, representatives of Party D spoke with representatives of Qatalyst Partners and expressed an interest in evaluating such a transaction.
On July 12, 2024, a representative of Party C informed a representative of Qatalyst Partners that it was not in a position to evaluate or pursue an acquisition of our company.
From July 12 to July 16, 2024, we entered into confidentiality agreements with each of Vista, Blackstone, Party A and Party B. All of these confidentiality agreements contained customary standstill provisions that expired upon our entry into a definitive agreement for a sale of our company, and none of these confidentiality agreements included a so-called “don’t ask – don’t waive” provision. In addition, we decided to provide confidential information to Party D subject to the terms of a previously executed confidentiality agreement, which did not contain a stand-still provision or so-called “don’t ask – don’t waive” provision.
From July 15 to July 16, 2024, we provided Blackstone, Vista, Party A, Party B and Party D with access to an electronic data room containing non-public financial information about our company, including among other things, a management presentation with detailed information on our product roadmap, new pricing model, go-to-market plans, as well as the Three Year Forecast.
On July 16, 2024, the Transaction Committee held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners, and other members of the Board of Directors, were present. During this meeting, representatives of Qatalyst Partners updated the Transaction Committee on the status of discussions with the Consortium and each of the other parties that it had contacted to assess their interest a potential transaction, including noting that Party C had indicated that it would not be in a position to evaluate an acquisition of us. The representatives of Qatalyst Partners then informed the Transaction Committee that Blackstone had requested approval to provide confidential information to three of its limited partners, including Platinum Falcon, in connection with the process pursuant to the terms of the confidentiality agreements between us and each of Blackstone and Vista. After a discussion, the Transaction Committee approved the request with respect to these three limited partners, on a non-exclusive basis, and directed our senior management and Qatalyst Partners to continue engaging with the Consortium members to generate an acquisition proposal that would provide superior value for our shareholders.
On July 17, 2024, the closing price for shares of our common stock on the NYSE was $45.34 (the “Unaffected Price”). The next day, prior to the close of trading, Reuters published an article stating that we had attracted
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acquisition interest from buyout firms. The closing price for shares of our common stock on July 18, 2024, was $47.81, an increase of approximately 5% over the Unaffected Price.
On July 19, 2024, a representative of Party B informed a representative of Qatalyst Partners that it was not interested in further considering an acquisition of our company because it was not in a position to offer a premium to the trading price of our shares of common stock given the risks it perceived from our recent retention trends and growth deceleration. On the same day, a representative of a financial sponsor (“Party E”) which was of a smaller scale than each of Blackstone and Vista contacted a representative of Qatalyst Partners and indicated that Party E was interested in evaluating a potential acquisition of our company. Representatives of Qatalyst Partners kept the Transaction Committee regularly apprised of these contacts and discussions as well as each of the additional contacts and discussions described below.
Also on July 19, 2024, our senior management made a presentation to representatives of the Consortium members during which we discussed, among other things, the information in the Management Presentation.
On July 22, 2024, our senior management held follow-up due diligence meetings with representatives of the Consortium members relating to our products and technology and financial results. In the meeting focused on financial results, the representatives of the Consortium members asked questions regarding headwinds the business has been facing related to the consistent deceleration of upsell bookings and increase in downsell bookings across our enterprise and SMB segments, which contributed to the year-over-year declines in net bookings in recent periods, and our senior management responded to these questions.
On July 23, 2024, our senior management held management meetings with each of Party A and Party D. The next day, our senior management had follow-up due diligence meetings with each of these parties.
On July 25, 2024, representatives of two financial sponsors (“Party F” and “Party G,” respectively), each of which was of a smaller scale than each of Blackstone and Vista, separately contacted representatives of Qatalyst Partners to indicate their interest in participating in a potential acquisition of our company. The representative of Party F indicated that Party F would only be able to participate as a minority equity investor in such a transaction. On the same day, a representative of Party E contacted a representative of Qatalyst Partners to reiterate Party E’s interest in discussing a potential acquisition of our company. Additionally, a representative of another financial sponsor (“Party H”), which also of a smaller scale than each of Blackstone and Vista, contacted Pete Godbole, our Chief Financial Officer, to convey its interest in discussing a potential acquisition of our company.
On July 26, 2024, representatives of the Consortium members informed representatives of Qatalyst Partners that the Consortium would not be able to submit a revised proposal to acquire our company on that date, as had previously been requested by Qatalyst Partners, and that they needed more time to better understand the trajectory of our bookings, the financial impact of the changes to our pricing and packaging model, and our anticipated results of our fiscal quarter ended July 31, 2024. On the same day, a representative of Party D informed representatives of Qatalyst Partners that Party D was not interested in further considering an acquisition of our company due to its view that an acquisition would provide insufficient synergy opportunities and present execution and integration risks.
On July 27, 2024, a representative of Party A informed representatives of Qatalyst Partners that Party A was not interested in further considering an acquisition of our company because it was not in a position to offer a premium to the trading price of our shares of common stock given the risks it perceived from the recent transitions in our business, including the changes to our executive team and our pricing and packaging model. The closing price for shares of our common stock on July 26 was $48.40.
On July 29, 2024, the Transaction Committee held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners, and other members of the Board of Directors, were present. At this meeting, representatives of Qatalyst Partners updated the Transaction Committee on the status of our strategic process, including that the Consortium had requested more time and diligence materials to evaluate our company before making a revised proposal and that each of the other parties that Qatalyst Partners had contacted at the request
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of the Transaction Committee had decided not to make a proposal to acquire our company. In addition, the representatives of Qatalyst Partners described the inbound expressions of interest that we had received from Party E, Party F, Party G and Party H. After the discussion, the Transaction Committee directed members of our management and representatives of Qatalyst Partners to continue to engage with the Consortium with respect to a revised acquisition proposal. The Transaction Committee also considered, with the assistance of Qatalyst Partners, the advantages and disadvantages of engaging with each of the four other financial sponsors who had expressed interest in leading or participating in a transaction involving the acquisition of our company. After discussion, the Transaction Committee directed Qatalyst Partners to engage with Party E and Party G to determine their interests in pursuing a potential acquisition transaction, but not to engage in further discussions with Party F or Party H at such time due to the Transaction Committee’s belief that such parties did not have sufficient capital to lead a transaction of this size.
At the same meeting, the Board of Directors reviewed an updated long-range forecast prepared by our management of our financial performance as an independent company for the remainder of fiscal year 2025 and fiscal years 2026 through 2035 (the “Financial Projections”), which were consistent with the Three Year Forecast previously reviewed by the Board of Directors and provided to the Consortium and other parties (except for the addition of the later years) in the Financial Projections. After discussion, the Board of Directors approved the Financial Projections for use by Qatalyst Partners in its financial analysis. For detailed discussion of the Financial Projections see the section of this proxy statement captioned “The Merger — Certain Financial Projections.”
On July 30, 2024, we entered into a confidentiality agreement with Party G and provided Party G with access to the virtual data room. The confidentiality agreement included a customary standstill provision that expired upon our entry into a definitive agreement for a sale of our company, and did not include a “don’t ask – don’t waive” provision. On the same day, a representative of Party E informed a representative of Qatalyst Partners that it was no longer interested in discussing a potential acquisition of our company at that time, but that it may be interested in evaluating a potential transaction later in the year.
From July 30 to August 13, 2024, we conducted additional due diligence meetings with representatives of the Consortium and provided additional financial due diligence information, including flash results of our fiscal quarter ended July 31, 2024.
On August 1, 2024, a representative of Party H spoke with Mr. Godbole and again noted its interest in discussing a potential acquisition of our company and indicated that they had an investment in a competitor of ours.
On August 7, 2024, a representative of Party G informed a representative of Qatalyst Partners that it was not interested in further considering an acquisition of our company, indicating that due to recent trends in our business they would not be able to offer a premium to the current trading price of our shares of common stock. The closing price for shares of our common stock on August 7 was $44.64.
On August 8, 2024, the chief executive officer of a strategic party (“Party I”) contacted Mr. Mader to express interest in potentially making a proposal for a business combination transaction, but did not make any proposal at that time.
On August 13, 2024, Qatalyst Partners provided the Board of Directors a customary disclosure letter describing certain relationships between Qatalyst Partners, on the one hand, and our company, the Consortium and other potentially interested parties on the other hand.
On August 14, 2024, Vista and its affiliates publicly disclosed on their periodic Form 13F filing that, as of June 30, 2024, their position had increased from 2,122,800 shares to 6,466,672 shares, approximately 4.7% of our shares outstanding. This accumulation was again noted by market analysts.
On August 21, 2024, the Consortium submitted a revised non-binding indication of interest to acquire all of the outstanding shares of our common stock for $56.50 in cash, subject to confirmatory due diligence and the negotiation of a definitive agreement (the “August 21 Proposal”). The Consortium indicated that the August 21
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Proposal was the Consortium’s “best and final offer,” and noted that the proposed per share consideration represented a premium of approximately 25% over the closing price for shares of our common stock on the Unaffected Date and an approximately 37% premium to the 60-day volume-weighted average price through that date. The August 21 Proposal stated that the Consortium had completed its business due diligence of our company, and that the Consortium was confident that it could execute a definitive merger agreement four weeks from the date it was permitted to engage prospective debt financing sources. The August 21 Proposal indicated that the acquisition would be financed with a combination of equity and debt financing from third-party lenders, with a substantial portion of the equity necessary coming from the Consortium. The August 21 Proposal also indicated that the Consortium was highly confident that it could obtain the requisite debt financing commitments prior to signing a definitive transaction agreement. The August 21 Proposal indicated that it was not contingent on any individual signing an employment agreement prior to the closing of the potential transaction. The August 21 Proposal also stated that the Consortium expected to enter into exclusive negotiations with respect to a potential transaction but did not indicate that it would be willing to include a customary “go-shop” provision in the definitive agreement.
On August 22, 2024, the chief executive officer of Party I spoke with representatives of Qatalyst Partners about the current status of the potential sale process and the feasibility of Party I making a definitive proposal. During this discussion, the executive said Party I would not enter into a confidentiality agreement with us or make a proposal to acquire our company at such time because it would need significantly more time to evaluate such a proposal.
On August 23, 2024, the Transaction Committee held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners, and other members of the Board of Directors, were present. At this meeting, representatives of Qatalyst Partners reviewed the outreach that it had conducted to Parties A, B, C and D, and the inbound interest that it had received following the July 18, 2024 media reports. The representatives of Qatalyst Partners then discussed the terms of the August 21 Proposal, including the Consortium’s request for exclusive negotiations, and reviewed a preliminary financial analysis of the August 21 Proposal, based on the Financial Projections. The Transaction Committee and representatives of Qatalyst Partners then discussed the potential response to the Consortium. As part of this discussion, it was noted that the Consortium had indicated their view that the $56.50 price per share included in the August 21 Proposal was a “best and final” offer for our company, and therefore, it was unlikely that a counterproposal from the Board of Directors would result in the Consortium providing a further increase in its price. The Transaction Committee also discussed its belief that the Consortium was unlikely to abandon the August 21 Proposal if our company declined to enter into exclusive negotiations with respect to the August 21 Proposal. A representative of Fenwick then reviewed with the Board of Directors its fiduciary duties in evaluating the request for exclusivity, and in considering a “go-shop” provision. After this discussion, the Transaction Committee instructed Qatalyst Partners to inform the Consortium that we would proceed to provide confirmatory due diligence information to the Consortium and negotiate a definitive agreement on the terms set forth in the August 21 Proposal, provided that we would not enter into exclusivity and that the definitive agreement would provide for (i) a 45-day “go-shop” period (and the Transaction Committee authorized Qatalyst Partners to offer that the “go-shop” could be limited to third parties with whom we had not entered into a confidentiality agreement with respect to a potential acquisition proposal within the three-month period ending on the date of the Merger Agreement), (ii) a termination fee payable by us under certain circumstances equal to 3.0% of equity value (or 1.5% of equity value during the go-shop period, other than in connection with a termination to enter into an acquisition agreement with certain parties with whom we had already engaged in discussions, and to whom we had provided confidential materials, as part of the current strategic process) and (iii) a reverse termination fee payable by the Consortium under certain circumstances equal to 6.0% of equity value.
Later that day, at the direction of the Transaction Committee, representatives of Qatalyst Partners spoke with representatives of the Consortium, and indicated that our company would not enter into an agreement to negotiate on an exclusive basis with the Consortium, and discussed the go-shop and termination fee terms that the Transaction Committee would require for a potential transaction as described above. After discussions, the Consortium confirmed it would proceed with non-exclusive negotiations regarding an acquisition of our company for $56.50 per share, and that the definitive agreement would contain the go-shop and termination fee provisions required by the Transaction Committee.
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On August 24, 2024, representatives of the Consortium delivered an initial confirmatory due diligence request list to Qatalyst Partners, including a request for meetings to discuss operational, product, accounting and legal due diligence. On the same day, we approved the Consortium’s outreach to certain potential debt financing sources on a non-exclusive basis.
On August 27, 2024, the Board of Directors held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners were present. At the meeting, representatives of Qatalyst Partners updated the Board of Directors on the status of negotiations with the Consortium and summarized the Consortium’s confirmatory due diligence requests. The Board of Directors instructed representatives of Fenwick to prepare an initial draft of the Merger Agreement, and to contact the Consortium’s legal advisors to commence negotiation of the Merger Agreement.
Later that day, representatives of Fenwick held a call with Kirkland and Simpson Thacher & Bartlett LLP, outside counsel to Blackstone (“STB”), to discuss the process for negotiations of the definitive acquisition agreements. In addition, we provided the Consortium access to an expanded virtual data room containing materials responding to the Consortium’s confirmatory due diligence request list.
On August 30, 2024 and September 3, 2024, members of our management held due diligence calls with representatives of the Consortium and their third-party advisors, and from then through September 23, 2024, members of our management held additional due diligence calls, responded to confirmatory due diligence requests from the Consortium and uploaded responsive documents to the virtual data room.
On September 4, 2024, representatives of Fenwick delivered an initial draft of the Merger Agreement to representatives of Kirkland and STB, which, among other things, provided for (i) a 45-day go-shop period during which we would be permitted to solicit alternative proposals from third parties with whom we had not entered into a confidentiality agreement with respect to a potential acquisition proposal within the three-month period ending on the date of the Merger Agreement, (ii) a termination fee payable by us under certain circumstances equal to 3.0% of equity value (or 1.5% of equity value under certain circumstances during the go-shop period), (iii) a reverse termination fee equal to 6.0% which would be payable by the Consortium under certain circumstances, and (iv) an affirmative duty for the Consortium to litigate against regulatory challenges to the Merger and to refrain from making acquisitions that would impose a delay in the obtaining of, or increase the risk of not obtaining, required regulatory approvals.
Later on September 4, 2024, Mr. Mader met with representatives of the Consortium to discuss the due diligence process.
On September 5, 2024, prior to the close of trading, a media report stated that a private equity consortium including Blackstone and Vista was engaged in discussions to acquire our company. That day, the closing price for our shares of common stock was $49.35, an increase of approximately 4% over the closing price for our shares of common stock on the previous trading day. Following the close of trading, we announced our results of operations for the second quarter of our fiscal year of 2025, including subscription revenue, operating income, free cash flow, and net income above analyst consensus estimates, while delivering professional services revenue below analyst consensus estimates. We lowered our professional services revenue guidance from 5% to 4.5% of total fiscal 2025 revenue while maintaining our existing full-year revenue guidance. While second quarter 2025 year-over-year revenue growth was 17%, net bookings (an indicator of future revenue performance) declined 11% year-over-year.
On September 7, 2024, the chief executive officer of Party I contacted Mr. Gregoire to discuss its interest in potentially submitting a proposal to acquire our company for consideration consisting of half cash and half stock of Party I. The representative of Party I indicated that Party I had not engaged a financial advisor or external legal counsel with respect to any such proposal.
On September 9, 2024, representatives of Party I further discussed Party I’s interest in pursuing a proposal to acquire our company with representatives of Qatalyst Partners, the feasibility of making a competitive proposal at that time, and the potential timing of any such proposal.
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On September 10, 2024, a representative of Party I informed representatives of Qatalyst Partners that it would not be pursuing an acquisition of our company at that time but would consider doing so if and when a definitive agreement was announced between our company and a third party.
Later that day, representatives of Kirkland and STB delivered proposed revisions of the Merger Agreement to Fenwick, which contemplated, among other terms, (i) that during the go-shop period we would not be able to solicit alternative proposals from third parties with whom we had discussed a potential acquisition proposal after March 31, 2024, whether or not we had entered into a confidentiality agreement with such parties, (ii) that the reverse termination fee would only be payable if Parent failed to consummate the Merger after the conditions of the Merger had been satisfied, and (iii) removal of the Consortium’s obligations to litigate against regulatory challenges and refrain making acquisitions would impose a delay in the obtaining of, or increase the risk of not obtaining, required regulatory approvals.
On September 11, 2024, Qatalyst Partners provided the Board of Directors with an updated customary disclosure letter describing certain relationships between Qatalyst Partners, on the one hand, and our company, the Consortium, Platinum Falcon and other potential co-investors, on the other hand.
On September 13, 2024, the Transaction Committee held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners, and other members of the Board of Directors, were present. At the meeting, members of our senior management and representatives of Qatalyst Partners updated the Transaction Committee on the status of confirmatory due diligence discussions with the Consortium. A representative of Fenwick then reviewed with the Transaction Committee and the other members of the Board of Directors who were present the material terms of the draft Merger Agreement, including the material open terms that were still under negotiation with the Consortium.
Later that day, representatives of Fenwick delivered a revised draft of the Merger Agreement to Kirkland and STB. The revised draft provided, among other things, that (i) we would be permitted to solicit alternative proposals from parties who, among other things, had not signed an confidentiality agreement after March 31, 2024, (ii) the reverse termination fee would be payable if a breach by Parent was the primary cause of a failure of the conditions to the Merger to be satisfied, and (iii) reinstated the obligations of the Consortium to litigate regulatory challenges and to refrain from undertaking transactions that would increase the risk of delaying or failing to obtain required regulatory approvals.
Also on September 13, 2024, prior to the close of trading, a media report stated that Blackstone and Vista were seeking $3.2 billion in private debt to fund an acquisition of our company. That day, the closing price for shares of our common stock was $52.22, an increase of approximately 3% over the closing price for our shares of common stock the previous trading day.
On September 14, 2024, representatives of Fenwick delivered to Kirkland and STB an initial draft of the disclosure letter relating to the draft Merger Agreement.
On September 15, 2024, representatives of Kirkland and STB delivered to Fenwick initial drafts of the forms of Equity Commitment Letter and Limited Guaranty.
On September 16, 2024, Mr. Mader met with representatives of the Consortium to discuss non-executive compensation and hiring plans. Mr. Mader did not discuss compensation of executive officers with the representatives of the Consortium.
Later on September 16, 2024, prior to the close of trading, a media report stated that Blackstone and Vista were in negotiations with us regarding an acquisition at a price around $56 per share (the “September 16 Article”). That day, the closing price for shares of our common stock was $52.69, an increase of approximately 1% over the closing price for our shares of common stock on prior trading date, when the last media report was published.
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On September 17, 2024, representatives of Kirkland and STB delivered a revised draft of the Merger Agreement to Fenwick, which provided, among other terms, (i) that the reverse termination fee would only be payable if Parent failed to consummate the Merger after the conditions of the Merger had been satisfied and (ii) reduced obligations of the Consortium to refrain from undertaking transactions that would increase the risk of delaying or failing to obtain required regulatory approvals.
Between September 19 and September 24, 2024, representatives of Fenwick, Kirkland and STB negotiated the terms of, and exchanged revised drafts of, the Merger Agreement, our disclosure letter, the Support Agreement, and the forms of Equity Commitment Letter and Limited Guaranty.
On September 19, 2024, the Transaction Committee held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners, and other members of the Board of Directors, were present. At the meeting, a representative of Fenwick reviewed the negotiations of the terms of the Merger Agreement, and the Transaction Committee provided direction with respect to certain open issues. Representatives of Qatalyst Partners and the Transaction Committee then discussed feedback that we had received after the publication of the September 16 Article from a shareholder who believed that the purported sale price described in the September 16 Article was inadequate. After a discussion of this feedback, the relative benefits of the proposed transaction with the Consortium and the risks of continuing to operate as an independent company, the Transaction Committee instructed members of its senior management and representatives of Qatalyst Partners and Fenwick to continue negotiations on the Merger Agreement and related transaction documents. The representatives of Qatalyst Partners then left the meeting, and the Transaction Committee reviewed the relationship letter provided by Qatalyst Partners on September 11, 2024, and noted that in the view of the Transaction Committee members, none of the specific disclosed information impaired the ability of Qatalyst Partners to provide financial advisory services to our company. In addition, each member of the Transaction Committee confirmed that he or she did not have any material relationships with Vista, Blackstone or Platinum Falcon.
On September 20, 2024, Qatalyst Partners provided the Board of Directors a further updated customary disclosure letter describing certain relationships between Qatalyst Partners, on the one hand, and our company, the Consortium, Platinum Falcon and other potential co-investors, on the other hand.
Also on September 20, 2024, Mr. Mader met with the CEO of Party I. During the meeting, Mr. Mader and the CEO of Party I discussed their respective businesses.
On September 22, 2024, representatives of Kirkland and STB delivered a revised draft of the Merger Agreement to Fenwick, which, among other things, accepted our company’s proposal that the reverse termination fee would be payable if a breach by Parent was the primary cause of a failure of the conditions to the Merger to be satisfied.
On September 23, 2024, the Board of Directors held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners were present. The representatives of Qatalyst Partners presented Qatalyst Partners’ financial analysis of the Merger and confirmed that Qatalyst Partners would be prepared to deliver an opinion, based on the financial analyses presented at the meeting, that, as of the date of such opinion, the Merger Consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of our common stock (other than Parent, Merger Sub and their respective affiliates) would be fair, from a financial point of view, to such holders, if and when requested by the Board of Directors prior to the execution of the Merger Agreement. Representatives of Fenwick then reviewed with the Board of Directors its fiduciary duties under Washington law, and the terms of the Merger Agreement, the Support Agreement and the other related transaction documents. The representatives of Qatalyst Partners then left the meeting, and the Transaction Committee reviewed the relationship letter provided by Qatalyst Partners on September 20, 2024, and noted that in the view of the Transaction Committee members, none of the specific disclosed information impaired the ability of Qatalyst Partners to provide financial advisory services to our company.
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Later that evening, representatives of Fenwick, Kirkland and STB finalized negotiations of the Merger Agreement, disclosure letter, Equity Commitment Letter, Limited Guaranty, Support Agreement and related transaction documents, and the Consortium delivered a finalized version of the debt financing commitment. The Board of Directors was furnished with final copies of such documents.
Early in the morning on September 24, 2024, the Board of Directors held a meeting at which members of our senior management and representatives of Fenwick and Qatalyst Partners were present. Representatives of Qatalyst Partners informed the Board of Directors that there had been no material change in any of the financial analyses previously provided by Qatalyst Partners at the September 23, 2024 meeting of the Board of Directors. Qatalyst Partners then rendered to the Board of Directors its oral opinion, subsequently confirmed in writing, that, as of September 24, 2024 and based upon and subject to the various assumptions, qualifications, limitations and other matters set forth in such written opinion, the Merger Consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of our common stock (other than Parent, Merger Sub and their respective affiliates), was fair, from a financial point of view, to such holders. For more information about Qatalyst Partners’ opinion, see below under the section captioned “The Merger — Opinion of Smartsheet’s Financial Advisor.” The Board of Directors then unanimously (i) determined that it was in the best interests of our company and our shareholders, and declared it advisable, to enter into the Merger Agreement, (ii) approved the execution, delivery and performance of the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, with our company surviving the Merger as a wholly owned Subsidiary of Parent, in accordance with the WBCA, (iii) resolved to recommend that the shareholders of our company approve the Merger Agreement and (iv) directed that the Merger Agreement be submitted to the shareholders of our company at the Company Shareholder Meeting for their approval.
Later that morning, we and affiliates of each Buyer executed the Merger Agreement and the related transaction documents. Before the opening of trading on NYSE, we issued a press release announcing our entry into the Merger Agreement.
The “Go-Shop” Period.
Beginning on September 24, 2024, representatives of Qatalyst Partners reached out to 41 parties, including 23 financial sponsors and 18 strategic parties, to invite such parties to discuss a potential acquisition of us in connection with our go-shop process. All of the parties contacted affirmatively declined to evaluate a potential transaction. On November 8, 2024, at 11:59 p.m. Pacific Time, the go-shop period provided for in the Merger Agreement will expire. Smartsheet does not anticipate soliciting any additional parties in connection with the go-shop process.
Recommendation of the Board of Directors and Reasons for the Merger
Recommendation of the Board of Directors
The Board of Directors has unanimously (i) determined that it is in the best interests of Smartsheet and the shareholders of Smartsheet, and declared it advisable, to enter into the Merger Agreement; (ii) approved the execution, delivery, and performance of the Merger Agreement and the consummation of the Transactions, including the Merger, with Smartsheet surviving as a wholly owned subsidiary of Parent, in accordance with the WBCA; (iii) resolved to recommend that Smartsheet’s shareholders approve the Merger Agreement; and (iv) directed that the Merger Agreement be submitted to Smartsheet shareholders at the Company Shareholders’ Meeting for their approval.
The Board of Directors unanimously recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Compensation Proposal, and (iii) “FOR” the Adjournment Proposal.
Reasons for the Merger
In reaching their decision to approve the Merger Agreement, and in recommending that Smartsheet’s shareholders vote in favor of the adoption of the Merger Agreement, the Board of Directors considered numerous
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positive factors relating to the Merger Agreement, the Merger, and the other Transactions, including the following material factors (which factors are not necessarily exhaustive or presented in order of relative importance):
•Certainty of Value. The Board of Directors considered the fact that the Merger Consideration is all cash, and therefore provides Smartsheet shareholders with immediate liquidity and certainty of value, while avoiding the long-term business and execution risks of retaining their shares of Smartsheet’s common stock.
•Business, Financial Condition and Prospects. The Board of Directors considered Smartsheet’s current, historical, and prospective financial condition and results of operations, competitive position, business, and prospects, including certain long-term financial projections for Smartsheet prepared by members of its senior management and which the Board of Directors reviewed (discussed in the section of this proxy statement captioned “—Background of the Merger” and “—Certain Financial Projections”).
•Risks of Continuing as a Stand-Alone Company. The Board of Directors considered the risks of continuing to execute our stand-alone plan as an independent company, including (i) the risks that our shareholders may not see the benefit of changes to our recently announced pricing and packaging model, or that such benefits may be delayed, (ii) the risks of successfully executing our go-to-market strategy, (iii) recent changes in our executive leadership, (iv) increasing competition from both existing competitors and potential entry by large, well-capitalized technology platforms, (v) the risks associated with sustained low levels of per seat spending within our customer base, (vi) the implications for future revenue growth of recent trends in key metrics, including decreasing upsell activity, increasing downsell activity, and declining net bookings, and (vii) the other risk factors to Smartsheet’s business and prospects as set forth in Smartsheet’s Quarterly Report on Form 10-Q filed with the SEC on September 6, 2024.
•Attractive Value. The Board of Directors considered the fact that the Merger Consideration represented compelling risk-adjusted value for the shares of Smartsheet common stock and believed that the Merger Consideration represented the best value reasonably available for Smartsheet shareholders, including compared to Smartsheet continuing to operate as a stand-alone company.
•Implied Premium. The Board of Directors considered the current and historical market prices, volatility, and trading information with respect to shares of Smartsheet common stock, including the fact that the Merger Consideration of $56.50 per share represented a premium of approximately (i) 25% to the closing price of Smartsheet stock on the Unaffected Date, and (ii) 41% to the volume weighted average closing price of Smartsheet stock for the 90 trading days ending on the Unaffected Date.
•Interactions with a Broad Range of Potentially Interested Counterparties. The Board of Directors also considered that, at the direction of the Board of Directors and its Transaction Committee, Smartsheet had engaged in discussions with nine other counterparties including (i) three additional financial sponsors and one strategic party that the Board of Directors believed were likely to have an interest in an acquisition of our company and would most likely have the ability to consummate a transaction of this size and nature, and (ii) four additional financial sponsors and one strategic party that expressed interest in exploring a potential acquisition of our company after the publication of an article on July 17, 2024 that we had attracted acquisition interest from buyout firms. No potentially interested counterparty other than the Consortium submitted an offer and, of the three other parties that provided their views of valuation, each of them indicated that they would not be able to support an offer at a premium to our company’s then-current stock price ($48.40, $48.29 and $44.64 per share at the time of the indications from Party A, Party B, and Party G, respectively).
•Negotiation Process. The Board of Directors considered the fact that the terms of the Merger were the result of robust, arm’s length negotiations conducted by Smartsheet at the direction of the Board of Directors and its Transaction Committee, and with the assistance of independent financial advisors and outside legal counsel. The Board of Directors believed that the Merger Consideration of $56.50 per share in cash represented the best value that Smartsheet could reasonably obtain from the Consortium for the shares
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of Smartsheet common stock, taking into account (i) the Consortium’s statements, including that this price was the Consortium’s best and final offer; (ii) the Board of Directors’ assessment, after consultation with its financial advisor, that other parties did not have the interest in, or capability to, acquire Smartsheet at a higher price; and (iii) the Board of Directors’ familiarity with the business, operations, prospects, business strategy, assets, liabilities, and general financial condition of Smartsheet on a historical and prospective basis and its assessment of associated risks, including execution risks with respect to Smartsheet’s business plan and growth targets. The Board of Directors believed, after consultation with representatives of Qatalyst Partners, that further negotiations would have created a risk of causing Blackstone and Vista Equity Partners to abandon the Transactions altogether or materially delaying the entry into definitive transaction agreements with respect to the Transactions, that it was unlikely that any other potential acquiror would be willing and able to acquire Smartsheet at a price in excess of the Merger Consideration even if Smartsheet were to conduct additional outreach, and that it was unlikely that any other potential counterparties would be willing and able to consummate a transaction with Smartsheet that the Board of Directors would view as more value-maximizing for Smartsheet’s shareholders than the Transactions.
•Strategic Alternatives. The Board of Directors considered the risks and potential benefits associated with other strategic alternatives and the potential for shareholder value creation associated with those alternatives, including a sale to another potential counterparty or the continuation of Smartsheet’s business plan as an independent public company. After a thorough review of strategic alternatives and discussions with management and Smartsheet’s financial and legal advisors, the Board of Directors determined that the Merger Consideration is more favorable to Smartsheet shareholders than the potential value that might result from other available strategic options.
•Go-Shop Rights. The Board of Directors also considered that the fact the Merger Agreement provides for the right, prior to 11:59 p.m., Pacific Time, November 8, 2024, to solicit Alternative Acquisition Proposals from, and participate in discussions and negotiations with, third parties regarding Alternative Acquisition Proposals (other than No-Shop Parties).
•Fairness Opinion of Qatalyst Partners. The oral opinion of Qatalyst Partners, subsequently confirmed in writing, delivered to the Board of Directors stating that as of September 24, 2024, based upon and subject to the various assumptions, qualifications, limitations, and other matters set forth in the opinion, the Merger Consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Smartsheet’s common stock was fair, from a financial point of view to such shareholders, as more fully described below under the caption “—Opinion of Smartsheet’s Financial Advisor.”
•Timing and Likelihood of Consummation. The Board of Directors considered the timing and likelihood that the Merger would be consummated based on, among other things (not in any relative order of importance):
◦The fact that Parent and Merger Sub obtained committed equity and debt financing commitments for the Transactions;
◦The limited conditions to Parent’s obligation to consummate the Merger as provided by the Merger Agreement, including the absence of a financing condition;
◦The absence of anticipated substantive issues expected in connection with the required regulatory approvals and the meaningful obligation of Parent to obtain such regulatory approvals;
◦Smartsheet’s entitlement, under certain circumstances pursuant to the Merger Agreement and the Equity Commitment Letters, to specific performance of Parent’s obligation to cause the equity commitments to Parent to be funded pursuant to the Equity Commitment Letters and to specific performance to prevent breaches of the Merger Agreement, Equity Commitment Letters, and the Limited Guaranties, and enforce specifically the terms of the Merger Agreement; and
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◦The business reputation, capabilities, and financial condition of each of Blackstone and Vista Equity Partners.
•Other Terms of the Merger Agreement. The Board of Directors considered other terms of the Merger Agreement, as more fully described under the section of this proxy statement captioned “The Merger Agreement,” including:
◦The ability of the Board of Directors to furnish information to, and conduct negotiations with, third parties in certain circumstances, to terminate the Merger Agreement to accept a Superior Proposal upon payment of a termination fee of $125,000,000, if such termination occurs prior to the No-Shop Date and the Superior Proposal is not made by a No-Shop Party, or $250,000,000, to accept a Superior Proposal after the No-Shop Date or from a No-Shop Party, which the Board of Directors believed was reasonable under the circumstances.
◦The remedies available to Smartsheet under the Merger Agreement including the rights of Smartsheet to specific performance and, in the event the Merger is not consummated, monetary damages, and the fact that the Merger Agreement and the Limited Guaranties provide that each of Blackstone, Vista Equity Partners, and Platinum Falcon could be liable for their pro rata portion of damages for breaches under the Merger Agreement, Equity Commitment Letters, and Limited Guaranties up to the Parent Liability Limit.
◦The requirement that, in the event of a failure of the Merger to be consummated under certain circumstances, Parent will pay Smartsheet a termination fee of $500,000,000, and the obligation of each Equity Investor under its respective Limited Guaranty to fund its pro rata share of such amount.
◦The scope of the representations, warranties, and covenants being made by Smartsheet and Parent.
◦The terms of the Merger Agreement provide Smartsheet with sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the Merger or the termination of the Merger Agreement.
•Dissenters’ Rights. The Board of Directors considered the fact that shareholders who do not vote for the approval of the merger agreement and who follow certain prescribed procedures will have the right to dissent from the merger and demand appraisal of the fair value of their shares under the WBCA. For more information on dissenters’ rights, please see the section of this proxy statement captioned “—Dissenters’ Rights.”
•Opportunity of Our Shareholders to Vote; Rights to Adjourn or Postpone to Solicit Additional Proxies. The Board of Directors considered the fact that the Merger would be subject to the approval of our shareholders, and that our shareholders would be free to evaluate the Merger and vote for or against the approval of the Merger Proposal at the Company Shareholders’ Meeting. In addition, the Board of Directors considered the fact that Smartsheet could require the adjournment or postponement of the Company Shareholders’ Meeting, upon the terms and subject to the conditions specified in the Merger Agreement, for the absence of a quorum at the Company Shareholders’ Meeting, or to allow additional solicitation of votes in order to obtain the adoption of the Merger Agreement by holders representing at least a majority of the outstanding shares of our common stock entitled to vote thereon.
In the course of reaching the determinations and decisions and making the recommendation described above, the Board of Directors, in consultation with Smartsheet’s senior management, outside legal counsel, and financial advisors, also considered the risks and potentially negative factors relating to the Merger Agreement, the Merger,
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and the other Transactions, including the following material factors (which factors are not necessarily exhaustive or presented in order of relative importance):
•No Ongoing Equity Interest in Smartsheet. The Board of Directors considered the fact that Smartsheet’s public shareholders will have no ongoing equity interest in the Surviving Corporation following the Merger, meaning that Smartsheet’s shareholders will cease to participate in Smartsheet’s potential future earnings or growth and will not benefit from any future increase in the value of Smartsheet following completion of the Merger.
•The Termination Fee. The Board of Directors considered the fact that Smartsheet may be required to pay a termination fee of $250,000,000 to Parent if the Merger Agreement is terminated under certain circumstances, provided that a lower fee of $125,000,000 will apply with respect to a termination by Smartsheet during the Go-Shop Period to enter into a Superior Proposal (unless such Superior Proposal was made by a No-Shop Party).
•Effect of Announcement. The Board of Directors considered the potential effect of the public announcement of the Transactions on Smartsheet’s employees, operations, and business partners and stock price, as well as its ability to attract and retain key personnel while the Merger is pending.
•Interim Operating Covenants. The Board of Directors considered the fact that the Merger Agreement imposes restrictions on the conduct of Smartsheet’s business prior to the consummation of the Merger, requiring Smartsheet to conduct its business according to its ordinary course of business consistent with past practice and refrain from taking certain specified actions without Parent’s prior written consent. The Board of Directors considered that such restrictions may potentially delay or prevent Smartsheet from pursuing business strategies or opportunities that may arise while the Merger is pending.
•Risks That the Merger May Not Be Approved by Our Shareholders. The Board of Directors considered the possibility that the Merger Proposal will not be approved by Smartsheet’s shareholders.
•Risks That the Merger Might Be Delayed or Not Be Completed at All. The Board of Directors considered the fact that there can be no assurance that all conditions to the parties’ obligations under the Merger Agreement will be satisfied on a timely basis or at all. Furthermore, the Board of Directors considered the risks and costs to Smartsheet if the Merger is not consummated in the anticipated timeframe or at all, including the diversion of Smartsheet’s management and employees’ attention; potential employee attrition; the potential effect on vendors, partners, users, and others that do business with Smartsheet; and the potential effect on the trading price of the shares of Smartsheet’s common stock.
•Transaction Costs. The Board of Directors considered the fact that significant costs have been and will continue to be incurred in connection with negotiating and entering into the Merger Agreement and completing the Merger, and that substantial time and effort of Smartsheet’s management and certain other key employees will be required, potentially resulting in disruptions to the operation of Smartsheet’s business. If the Merger is not consummated, Smartsheet will be required to pay its own expenses associated with the Merger Agreement, and the resulting public announcement of the termination of the Merger Agreement could affect the trading price of Smartsheet’s common stock.
•Potential Conflicts of Interest. The Board of Directors considered the potential conflicts of interest created by the fact that Smartsheet’s executive officers and directors may have interests in the Merger that may be different from or in addition to those of other shareholders, as described in the section of this proxy statement captioned “—Interests of Smartsheet’s Directors and Executive Officers in the Merger.”
•Regulatory Approval and Risks of Pending Actions. The Board of Directors considered the fact that the completion of the Merger requires certain regulatory clearances, which could subject the Merger to unforeseen delays and risk.
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•Cap on Parent Liability. The Merger Agreement provides that the maximum aggregate liability of Parent for breaches under the Merger Agreement will not exceed, in the aggregate for all such breaches, the Parent Liability Limit.
•Tax Treatment. The Board of Directors considered the fact that the receipt of cash by our shareholders in exchange for our common stock as a result of the Merger generally will be taxable to our shareholders for U.S. federal income tax purposes (as further described in the section of this proxy statement captioned “—U.S. Federal Income Tax Considerations of the Merger”).
The Board of Directors believed that, overall, the potential benefits of the Merger to Smartsheet’s shareholders substantially outweighed the risks and uncertainties of the Merger.
The foregoing discussion of factors considered by the Board of Directors contains the material factors considered by the Board of Directors, but is not in any way intended to be exhaustive. In light of the variety of factors considered in connection with its evaluation of the Merger, the Board of Directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Each member of the Board of Directors applied his or her own business judgment to the process and may have given different weight to different factors. The Board of Directors did not undertake to make any specific determination as to whether any factor or any particular aspect of a factor supported or did not support its ultimate determination. Rather, the Board of Directors based its recommendation on the totality of the information presented.
Opinion of Qatalyst Partners LP
Smartsheet retained Qatalyst Partners to act as financial advisor to Smartsheet in connection with a potential transaction such as the merger and to evaluate whether the per share price of $56.50 to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Smartsheet common stock (other than Parent, Merger Sub, and their respective affiliates) was fair, from a financial point of view, to such Smartsheet shareholders. Smartsheet selected Qatalyst Partners to act as Smartsheet’s financial advisor based on Qatalyst Partners’ extensive expertise, knowledge of the industry in which Smartsheet operates, and experience advising technology companies in connection with potential strategic transactions. Qatalyst Partners has provided its written consent to the reproduction of its opinion in this proxy statement. At the meeting of the Board of Directors on September 24, 2024, Qatalyst Partners rendered to the Board of Directors its oral opinion, subsequently confirmed in writing, to the effect that, as of September 24, 2024, and based upon and subject to the various assumptions, qualifications, limitations, and other matters set forth therein, the per share price to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Smartsheet shareholders (other than Parent, Merger Sub, and their respective affiliates) was fair, from a financial point of view, to such holders.
The full text of Qatalyst Partners’ written opinion, dated September 24, 2024, is attached to this proxy statement as Annex C and is incorporated herein by reference. The opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications of the review undertaken by Qatalyst Partners in rendering its opinion. Smartsheet shareholders should read the opinion carefully in its entirety. Qatalyst Partners’ opinion was provided to the Board of Directors and addresses only, based upon and subject to the various other assumptions, qualifications, limitations and other matters set forth therein, the fairness, from a financial point of view, of the per share price to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Smartsheet shareholders (other than Parent, Merger Sub, and their respective affiliates), and it does not address any other aspect of the Merger. It does not constitute a recommendation as to how any Smartsheet shareholder should vote with respect to the merger or any other matter and does not in any manner address the price at which Smartsheet common stock will trade at any time. The summary of Qatalyst Partners’ opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached to this proxy statement as Annex C.
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In arriving at its opinion, Qatalyst Partners reviewed a draft of the Merger Agreement, certain related documents and certain publicly available financial statements, and other business and financial information of Smartsheet. Qatalyst Partners also reviewed the Financial Projections (as defined in the section of this proxy statement captioned “—Background of the Merger”) which were prepared by the management of Smartsheet at the direction of the Board of Directors and approved by the Board of Directors for use by Qatalyst Partners. Additionally, Qatalyst Partners discussed the past and current operations and financial condition and the prospects of Smartsheet with senior management of Smartsheet. Qatalyst Partners also reviewed the historical market prices and trading activity for the Class A common stock, and compared the financial performance of Smartsheet and the prices and trading activity of its Class A common stock with that of certain other selected publicly traded companies and their securities. In addition, Qatalyst Partners reviewed the financial terms, to the extent publicly available, of selected acquisition transactions and performed such other analyses, reviewed such other information, and considered such other factors as Qatalyst Partners deemed appropriate.
In arriving at its opinion, Qatalyst Partners assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied, or otherwise made available to, or discussed with, Qatalyst Partners by Smartsheet. With respect to the Financial Projections, Qatalyst Partners was advised by Smartsheet management, and Qatalyst Partners assumed based on discussions with Smartsheet management and the Board of Directors, that the Financial Projections had been reasonably prepared on bases reflecting the best currently available estimates and judgments of Smartsheet management of the future financial performance of Smartsheet and other matters covered thereby. Qatalyst Partners assumed that the terms of the draft Merger Agreement reviewed by Qatalyst Partners would not differ materially from the final executed merger agreement, and that the merger will be consummated in accordance with the terms set forth in the Merger Agreement, without any modification, waiver, or delay. In addition, Qatalyst Partners assumed that in connection with the receipt of all the necessary approvals of the merger, no delays, limitations, conditions or restrictions will be imposed that could have an adverse effect on Smartsheet or the contemplated benefits expected to be derived in the merger. Qatalyst Partners did not make any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Smartsheet or its affiliates, nor was Qatalyst Partners furnished with any such evaluation or appraisal. In addition, Qatalyst Partners relied upon, without independent verification, the assessment of Smartsheet management as to the existing and future technology and products of Smartsheet and the risks associated with such technology and products. Qatalyst Partners’ opinion has been approved by its opinion committee in accordance with its customary practice.
Qatalyst Partners’ opinion is necessarily based on financial, economic, market, and other conditions as in effect on, and the information made available to it as of, September 24, 2024. Events occurring after September 24, 2024, may affect Qatalyst Partners’ opinion and the assumptions used in preparing it, and Qatalyst Partners has not been asked and has not assumed any obligation to update, revise, or reaffirm its opinion. Qatalyst Partners’ opinion does not address the underlying business decision of Smartsheet to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to Smartsheet. Qatalyst Partners’ opinion is limited to the fairness, from a financial point of view, of the per share price to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Smartsheet shareholders (other than Parent, Merger Sub, and their respective affiliates), and Qatalyst Partners expressed no opinion with respect to the fairness of (i) the amount or nature of the compensation to any of the officers, directors, or employees of Smartsheet or any of its affiliates, or any class of such persons, relative to such consideration; (ii) the allocation of the aggregate consideration to be paid to holders between the holders of Class A common stock and the holders of Class B common stock; or (iii) the voting rights associated with the Class B common stock or any governance or other rights of the holders thereof (and Qatalyst Partners has not taken any such rights into account in its analysis).
The following is a summary of the material analyses performed by Qatalyst Partners in connection with its opinion dated September 24, 2024. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Qatalyst Partners’ opinion. For purposes of its analyses, Qatalyst Partners utilized, among other things, the Financial Projections, described in the section of this proxy statement captioned “—Certain Financial Projections.” Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully
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understand the financial analyses used by Qatalyst Partners, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Qatalyst Partners’ financial analyses.
Discounted Cash Flow Analysis
Qatalyst Partners performed an illustrative discounted cash flow analysis, which is designed to imply a range of potential per-share present values for our common stock as of July 31, 2024 (which is the end of Smartsheet’s most recent completed fiscal quarter and most recent publicly available balance sheet date), using mid-period convention, by:
•adding:
◦the implied net present value of the estimated future unlevered free cash flows (which we refer to as the “UFCF”) of Smartsheet, based on the Financial Projections for the third quarter of fiscal year 2025 through fiscal year 2035 as set forth in the Financial Projections table in the section below captioned “—Certain Financial Projections” (which implied present value was calculated using a range of discount rates of 11.5% to 13.0%), based on an estimated weighted average cost of capital for Smartsheet (utilizing the capital asset pricing model and inputs based on Qatalyst Partners’ professional judgment);
◦the implied net present value of a corresponding terminal value of Smartsheet, calculated by applying to Smartsheet’s estimated UFCF in fiscal year 2035, based on the Financial Projections, a perpetuity growth rate range of 2.5% to 4.5% (which was chosen based on Qatalyst Partners’ professional judgment and experience), and discounted to present value using the same range of discount rates used in the first bullet above;
◦net cash of approximately $706 million as of July 31, 2024, as disclosed in the Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2024, filed with the SEC by Smartsheet on September 6, 2024; and
◦dividing the resulting amount by the number of fully diluted shares of our common stock outstanding (calculated using the treasury stock method); and taking into account outstanding restricted stock units and performance share units and in-the-money stock options, as of September 19, 2024, all as provided by Smartsheet management, with each of the above-referenced estimated future UFCFs and terminal values having also been adjusted for the degree of estimated dilution to current stockholders through each respective applicable period (which totaled approximately 34 percent in the case of the terminal value) due to the estimated net effects of equity issuances and cancelations related to future equity compensation, based on estimates of future dilution provided by Smartsheet management.
Based on the calculations set forth above, this analysis implied a range of values for our common stock of approximately $47.80 to $65.31 per share.
Selected Companies Analysis
Qatalyst Partners reviewed and compared selected financial information and public market multiples for Smartsheet with publicly available financial information and public market multiples for selected companies. The companies used in this comparison were those companies listed below, which were selected by Qatalyst Partners in its professional judgment based on factors including that they are publicly traded companies in similar lines of business to Smartsheet, have a similar business model, have similar financial performance, or have other relevant or similar characteristics.
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Based upon third-party research analyst consensus estimates as of September 23, 2024 (which we refer to as the “Analyst Projections”) and using the closing prices as of September 23, 2024, for shares of the selected companies, Qatalyst Partners calculated, among other things, the fully diluted enterprise value divided by the estimated consensus revenue for calendar year 2025 (which we refer to as the “CY2025E Revenue Multiples”) for each of the selected companies as well as the fully diluted equity value divided by the consensus levered free cash flow (which we refer to as the “LFCF”) for calendar year 2025 (which we refer to as the “CY2025E LFCF Multiples”) for each of the selected companies.
The companies used in this comparison are listed below:
Selected Software
CY2025E
Revenue
Multiple
CY2025E
LFCF
Multiple
Workday, Inc.
6.7x27.1x
monday.com Ltd.
11.1x48.1x
Okta, Inc.
4.5x20.6x
Paycom Software, Inc.
4.6x26.9x
UiPath, Inc.
3.7x21.3x
BILL Holdings, Inc.
3.4x24.1x
Workiva Inc.
5.5x42.2x
Freshworks Inc.
3.2x23.3x
Asana, Inc.
3.3x— 
Five9, Inc.
2.0x14.7x
PagerDuty, Inc.
3.4x18.4x
Sprout Social, Inc.
3.6x34.4x
__________________
*Multiples greater than 75.0x, negative or not publicly available marked as “–.”
Selected Productivity Software
CY2025E
Revenue
Multiple
CY2025E
LFCF
Multiple
Salesforce, Inc.
6.1x19.5x
Atlassian Corporation
7.7x28.6x
Zoom Video Communications, Inc.
3.2x14.4x
DocuSign, Inc.
4.1x14.4x
Dropbox, Inc.
3.7x9.9x
Box, Inc.
4.9x16.0x
Based on an analysis of the CY2025E Revenue Multiples for the selected companies and the application of its professional judgment, Qatalyst Partners selected a representative multiple range of 3.5x to 6.0x. Qatalyst Partners then applied this range to each of Smartsheet’s estimated revenue projections for fiscal year 2026: $1,318 million based on the Financial Projections, and $1,285 million based on the Analyst Projections. Based on the fully diluted shares of our common stock outstanding as of September 19, 2024 (calculated utilizing the same methodology as used in the section of this proxy statement captioned “— Discounted Cash Flow Analysis”) as provided by Smartsheet management, this analysis implied a range of values for our common stock of approximately $36.05 to $58.26 per share based on the Financial Projections, and approximately $35.28 to $56.94 per share based on the Analyst Projections. For purposes of this analysis, Qatalyst Partners used Smartsheet’s fiscal year ending January 31, 2026, as a proxy for calendar year 2025.
Based on the analysis of the CY2025E LFCF Multiples for the selected companies and the application of its professional judgment, Qatalyst Partners selected a representative range of 18.0x to 27.0x. Qatalyst Partners then
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applied this range to each of Smartsheet’s estimated LFCF for fiscal year 2026: $324 million based on the Financial Projections, and $295 million based on the Analyst Projections. Based on the number of fully diluted shares of our common stock outstanding as of September 19, 2024 (calculated utilizing the same methodology as used in the section of this proxy statement captioned “— Discounted Cash Flow Analysis”) as provided by Smartsheet management, this analysis implied a range of values for our common stock of approximately $39.56 to $59.23 based on the Financial Projections and approximately $35.94 to $53.81 based on the Analyst Projections. For purposes of this analysis, Qatalyst Partners used Smartsheet’s fiscal year ending January 31, 2026, as a proxy for calendar year 2025.
No company included in the selected companies analysis is identical to Smartsheet. In evaluating the selected companies, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market, and financial conditions and other matters. Many of these matters are beyond the control of Smartsheet, such as the impact of competition on Smartsheet’s business and the industry in general, industry growth and the absence of any material adverse change in Smartsheet’s financial condition and prospects, or the industry or in the financial markets in general. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected company data.
Selected Transactions Analysis
Qatalyst Partners compared 69 selected public company transactions, including transactions involving companies participating in similar lines of business to Smartsheet or with similar business models, similar financial performance, or other relevant or similar characteristics based on Qatalyst Partners’ experience and professional judgment.
For each of the selected transactions listed below, Qatalyst Partners reviewed, among other things, (i) the implied fully diluted enterprise value of the target company as a multiple of Analyst Projections of the next-12-months’ revenue of such target company (which we refer to as the “NTM Revenue Multiples”); (ii) the implied fully diluted enterprise value of the target company as a multiple of Analyst Projections of the next-12-months’ earnings before interest, taxes, depreciation, and amortization (which we refer to as “EBITDA”) of such target company (which we refer to as the “NTM EBITDA Multiples”); and (iii) the implied fully diluted equity value of the target company as a multiple of Analyst Projections of the next-12-months’ levered free cash flow of such target company (which we refer to as the “NTM LFCF Multiples”).
Announcement
Date
TargetAcquiror
NTM
Revenue
Multiple
NTM
EBITDA
Multiple
NTM
LFCF
Multiple
09/09/2024Squarespace, Inc.Permira5.6x22.9x23.2x
07/25/2024Instructure Holdings, Inc.KKR6.9x16.9x20.1x
06/07/2024PowerSchool Holdings, Inc.Bain Capital7.2x21.0x28.2x
06/05/2024WalkMe Ltd.SAP SE4.0x68.2x51.4x
04/26/2024Darktrace plcThoma Bravo6.3x26.9x36.5x
04/24/2024HashiCorp, Inc.International Business Machines Corporation9.9x——
04/08/2024Model N, Inc.Vista Equity Partners4.8x24.5x25.8x
03/01/2024Everbridge, Inc.Thoma Bravo3.9x17.5x22.9x
12/18/2023Alteryx, Inc.Clearlake Capital and Insight Partners4.2x27.2x74.7x
10/23/2023EngageSmart, Inc.Vista Equity Partners8.8x47.6x70.5x
09/21/2023Splunk Inc.Cisco Systems, Inc.7.1x30.9x29.3x
07/31/2023New Relic, Inc.Francisco Partners and TPG5.8x30.4x48.1x
05/04/2023Software AGSilver Lake2.6x14.4x37.5x
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03/14/2023Cvent Holding Corp.Blackstone6.5x34.1x58.6x
03/13/2023Momentive Global Inc.STG Partners, LLC3.0x16.0x17.0x
03/13/2023Qualtrics International Inc.Silver Lake & CPPIB7.1x50.2x—
02/09/2023Sumo Logic, Inc.Francisco Partners4.2x——
01/09/2023Duck Creek Technologies, Inc.Vista Equity Partners 7.0x——
12/12/2022Coupa Software IncorporatedThoma Bravo8.4x37.5x39.3x
10/27/2022UserTesting, Inc.Thoma Bravo5.3x——
10/11/2022ForgeRock, Inc.Thoma Bravo8.4x——
09/28/2022BTRS Holdings Inc.EQT 7.9x——
08/08/2022Avalara, Inc.Vista Equity Partners8.8x——
08/03/2022Ping Identity Holding Corp.Thoma Bravo8.0x——
06/24/2022Zendesk, Inc.H&F & Permira5.4x48.7x46.0x
06/06/2022Anaplan, Inc.Thoma Bravo12.8x——
05/04/2022Black Knight, Inc.Intercontinental Exchange, Inc.9.7x19.7x28.2x
04/11/2022Datto Holding Corp.Kaseya & Insight8.3x36.0x—
04/11/2022SailPoint Technologies Holdings, Inc.Thoma Bravo13.3x——
12/07/2021Mimecast LimitedPermira8.8x32.1x40.6x
08/19/2021Inovalon Holdings, Inc.Nordic Capital8.8x25.0x41.5x
08/05/2021Cornerstone OnDemand, Inc.Clearlake Capital Group, L.P.5.9x18.8x18.4x
07/26/2021Medallia, Inc.Thoma Bravo10.8x——
06/28/2021QAD Inc.Thoma Bravo5.3x50.6x70.8x
04/26/2021Proofpoint, Inc.Thoma Bravo9.4x55.6x59.0x
03/10/2021Talend S.A.Thoma Bravo7.4x——
03/08/2021Pluralsight, Inc.Vista Equity Partners8.4x——
12/21/2020RealPage, Inc.Thoma Bravo8.2x28.9x37.8x
12/01/2020Slack Technologies, Inc.Salesforce, Inc.29.0x——
12/17/2019LogMeIn, Inc.Francisco Partners3.4x10.7x14
12/04/2019Instructure, Inc.Thoma Bravo6.5x——
06/12/2019Medidata Solutions, Inc.
Dassault Systèmes SE
7.5x31.0x—
02/12/2019Ellie Mae, Inc.Thoma Bravo6.8x31.0x—
02/04/2019The Ultimate Software Group, Inc.Investor Group8.4x34.5x62.1x
12/24/2018MINDBODY, Inc.Vista Equity Partners6.7x——
12/23/2018MYOB Group LimitedKKR4.9x12.1x27.5x
11/11/2018athenahealth, Inc.Veritas Capital & Elliot Management Corporation3.9x13.8x34.0x
11/11/2018Apptio, Inc.Vista Equity Partners7.0x——
10/15/2018SendGrid, Inc.Twilio Inc.11.5x——
01/29/2018Callidus Software Inc.SAP America, Inc.8.3x56.9x—
12/17/2017Aconex LimitedOracle Corporation8.1x——
08/31/2016Interactive Intelligence Group, Inc.Genesys (Permira)3.2x39.0x—
08/01/2016Fleetmatics Group PLCVerizon Communications Inc.6.3x18.4x35.6x
07/28/2016NetSuite Inc.Oracle Corporation9.1x——
06/01/2016Demandware, Inc.Salesforce, Inc.8.9x——
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05/31/2016Marketo, Inc.Vista Equity Partners5.9x——
05/18/2016inContact, Inc.NICE-Systems Ltd.3.6x45.1x—
04/18/2016Cvent, Inc.Vista Equity Partners6.5x52.5x—
11/02/2015Constant Contact, Inc.Endurance International Group Holdings, Inc.2.3x11.3x24.2x
06/15/2015Dealertrack Technologies, Inc.Cox Automotive, Inc.4.1x19.4x20.0x
09/18/2014Concur Technologies, Inc.SAP America, Inc.10.2x62.0x—
12/20/2013Responsys, Inc.Oracle Corporation6.9x58.0x—
06/04/2013ExactTarget, Inc.Salesforce, Inc.6.5x——
08/27/2012Kenexa CorporationInternational Business Machines Corporation3.3x18.8x26.8x
05/22/2012Ariba, Inc.SAP America, Inc.7.8x32.4x48.9x
02/09/2012Taleo CorporationOracle Corporation5.3x26.6x46.1x
12/03/2011SuccessFactors, Inc.SAP America, Inc.8.7x——
10/24/2011RightNow Technologies, Inc.Oracle Corporation6.2x31.8x64.4x
07/01/2011Blackboard Inc.Providence Equity Partners, L.L.C3.2x12.6x16.2x
___________
*Multiples greater than 75.0x, negative or not publicly available marked as “—.”
Based on an analysis of the NTM Revenue Multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative multiple range of 5.0x to 7.0x and then applied this range to Smartsheet’s estimated next-12-months’ revenue (calculated as the 12-month period ending July 31, 2025) based on the Analyst Projections. Based on the fully diluted shares of our common stock outstanding as of September 19, 2024 (calculated utilizing the same methodology as used in the section of this proxy statement captioned “—Discounted Cash Flow Analysis”), as provided by Smartsheet management, this analysis implied a range of values for our common stock of approximately $45.38 to $61.54 per share.
Based on an analysis of the NTM EBITDA multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative multiple range of 27.0x to 38.0x and then applied this range to Smartsheet’s estimated next-12-months’ EBITDA (calculated as the 12-month period ending July 31, 2025) based on the Analyst Projections. Based on the same fully diluted share count as used in the immediately preceding paragraph, this analysis implied a range of values for our common stock of approximately $44.72 to $60.91 per share.
Based on an analysis of the NTM LFCF multiples for the selected transactions and its professional judgment, Qatalyst Partners selected a representative range of 25.0x to 38.0x and then applied this range to Smartsheet’s estimated next-12-months’ LFCF (calculated as the 12-month period ending July 31, 2025) based on the Analyst Projections. Based on the same fully diluted share count as used in the immediately preceding paragraph, this analysis implied a range of values for our common stock of approximately $45.52 to $69.06 per share.
No company or transaction utilized in the selected transactions analysis is identical to Smartsheet or the Merger. In evaluating the selected transactions, Qatalyst Partners made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond Smartsheet’s control, such as the impact of competition on Smartsheet’s business or the industry generally, industry growth, and the absence of any material adverse change in Smartsheet’s financial condition and prospects or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared. Individual multiples or mathematical analysis, such as determining the arithmetic mean, median, or the high or low, is not in itself a meaningful method of using selected transactional data. Because of the unique circumstances of each of these transactions and the Merger, Qatalyst Partners cautions against placing undue reliance on this information.
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Miscellaneous
In connection with the review of the Merger by the Board of Directors, Qatalyst Partners performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving at its opinion, Qatalyst Partners considered the results of all its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Qatalyst Partners believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Qatalyst Partners may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Qatalyst Partners’ view of the actual value of Smartsheet. In performing its analyses, Qatalyst Partners made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of Smartsheet. Any estimates contained in Qatalyst Partners’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.
Qatalyst Partners conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the per share price to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Smartsheet shareholders (other than Parent, Merger Sub, and their respective affiliates), to such holders. These analyses do not purport to be appraisals or to reflect the price at which Smartsheet common stock might actually trade at any time.
Qatalyst Partners’ opinion and its presentation to the Board of Directors was one of many factors considered by the Board of Directors in deciding to approve the Merger Agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Board of Directors with respect to the per share price to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Smartsheet shareholders (other than Parent, Merger Sub, and their respective affiliates) or of whether the Board of Directors would have been willing to agree to different consideration. The per share price payable in the Merger was determined through arm’s-length negotiations between the Board of Directors and Parent and was approved by the Board of Directors. Qatalyst Partners provided advice to Smartsheet during these negotiations. Qatalyst Partners did not, however, recommend any specific consideration to Smartsheet or that any specific consideration constituted the only appropriate consideration for the Merger.
Qatalyst Partners provides investment banking and other services to a wide range of entities and individuals, domestically and offshore, from which conflicting interests or duties may arise. In the ordinary course of these activities, affiliates of Qatalyst Partners may at any time hold long or short positions, and may trade or otherwise effect transactions in debt or equity securities or loans of Smartsheet, Parent, or certain of their respective affiliates.
During the two-year period prior to the date of Qatalyst Partners’ opinion, no material relationship existed between Qatalyst Partners or any of its affiliates and Smartsheet, Parent, Blackstone, Vista Equity Partners, or Platinum Falcon, pursuant to which compensation was received by Qatalyst Partners or its affiliates, except that Qatalyst Partners has provided financial advisory services to (i) Cvent Inc., a then-majority-owned portfolio company of Vista Equity Partners, an affiliate of Parent, and received approximately $49 million in connection with such services, and (ii) Apptio Inc., a then-majority-owned portfolio company of Vista Equity Partners, an affiliate of Parent, and received approximately $7.5 million in connection with such services. Qatalyst Partners and/or its affiliates may in the future provide investment banking and other financial services to Smartsheet, Parent, Blackstone, Vista Equity Partners, Platinum Falcon, and their respective affiliates for which it would expect to receive compensation. The information regarding compensation received by and prior relationships of Qatalyst Partners disclosed in this section is based upon information provided to Smartsheet by Qatalyst Partners.
Under the terms of its engagement letter, Qatalyst Partners provided Smartsheet with financial advisory services in connection with the Merger for which it will be paid an aggregate amount currently estimated at approximately $88 million, subject to the closing of the Merger, $7 million of which was payable upon
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delivery of its opinion (regardless of the conclusion reached in the opinion), and $250,000 of which was payable upon execution of the engagement letter. Smartsheet has also agreed to reimburse Qatalyst Partners for its expenses incurred in performing its services. Smartsheet has also agreed to indemnify Qatalyst Partners and its affiliates, their respective members, directors, officers, partners, agents, and employees and any person controlling Qatalyst Partners or any of its affiliates against certain liabilities, including liabilities under the federal securities laws, and certain expenses related to or arising out of Qatalyst Partners’ engagement.
Certain Financial Projections
Other than in connection with Smartsheet’s regular earnings press releases and related investor communications, Smartsheet’s management does not, as a matter of course, publicly disclose forecasts or internal projections as to future performance, or results of operations, earnings, or other results, due to, among other things, the inherent difficulty and subjectivity of predicting financial performance for future periods and the likelihood that the underlying assumptions and estimates may not be realized. However, Smartsheet’s management prepared the Financial Projections at the request of the Board of Directors in connection with the Board of Directors’ review of the Transactions.
The Financial Projections are not being included in this proxy statement to influence any shareholder’s decision on how to vote with respect to the Merger Proposal, but instead are being included solely because the Financial Projections were provided to the Board of Directors to evaluate the transactions contemplated by the Merger Agreement and the other strategic alternatives considered by the Board of Directors, and were approved by the Board of Directors to be used by Qatalyst in connection with its financial analyses and opinion, as described in the section of this proxy statement captioned “— Opinion of Smartsheet’s Financial Advisor.”
Smartsheet is summarizing the Financial Projections in this proxy statement to provide our shareholders with access to certain non-public, unaudited, prospective financial information that was prepared for the Board of Directors for the purposes described above.
Cautionary Note About the Financial Projections
The Financial Projections, while necessarily presented with numerical specificity, were based on numerous variables and financial, operating, and commercial assumptions, developed solely using the information available to Smartsheet’s management at the time, that were inherently uncertain and many of which were beyond Smartsheet’s control. Important factors that may affect actual results and cause the Financial Projections not to be achieved include the effect of uncertainties related to macroeconomic and geopolitical factors such as inflation, fluctuating interest rates, adverse developments that affect financial institutions or the financial services industry generally, increased volatility in the equity and debt capital markets, and the risk of expansion of regional conflicts on the U.S. and global markets; Smartsheet’s business, operations, and customers; the highly competitive nature of collaborative work management software and product introductions; promotional activity by Smartsheet’s competitors, and Smartsheet’s ability to differentiate its platform and applications; Smartsheet’s ability to introduce new and enhanced product offerings and the continued market adoption of its platform; Smartsheet’s ability to attract new customers and retain and expand sales to existing customers; Smartsheet’s ability to provide effective customer support; Smartsheet’s ability to expand its sales force to address effectively the new industries, geographies, and types of organizations it intends to target; Smartsheet’s ability to attract and retain qualified employees and key personnel; Smartsheet’s ability to protect and enhance its brand and intellectual property; and other risk factors set forth in Smartsheet’s most recent Quarterly Report on Form 10-Q filed with the SEC on September 6, 2024 and Smartsheet’s Annual Report on Form 10-K filed with the SEC on March 20, 2024. There can be no assurance of the size and growth potential of the markets for our products and planned products, our ability to serve those markets and the rate and degree of market acceptance of Smartsheet’s enhanced product offerings and the continued market adoption of its platform, and it is possible that other product offerings will be preferable. The Financial Projections also reflect assumptions as to certain business decisions that are subject to change. In addition, the Financial Projections do not take into account any circumstances or events occurring after the date that they were prepared, do not give effect to the Merger (including the announcement thereof), and may be affected by Smartsheet’s ability to
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achieve strategic goals, objectives and targets over the applicable period. As a result, there can be no assurance that the Financial Projections will be realized, and actual results may be materially better or worse than those contained in the Financial Projections.
Because the Financial Projections reflect estimates and judgments, they are susceptible to sensitivities and assumptions, as well as multiple interpretations based on actual experience and business developments. The Financial Projections also cover multiple years, and such information by its nature becomes less predictive with each succeeding year. The Financial Projections are not, and should not be considered to be, a guarantee of future operating results. Further, the Financial Projections are not fact and should not be relied upon as being necessarily indicative of our future results.
In light of the foregoing factors and the uncertainties inherent in the Financial Projections, our shareholders are cautioned not to place undue, if any, reliance on the Financial Projections. The Financial Projections were not prepared with a view toward public disclosure. The inclusion of the Financial Projections in this proxy statement should not be regarded as an indication that Smartsheet or any of its affiliates, advisors, officers, directors, or representatives considered or consider the Financial Projections to be predictive of actual future events, and the Financial Projections should not be relied upon as such or construed as financial guidance. Further, the inclusion of the Financial Projections in this proxy statement does not constitute an admission or representation by Smartsheet or any of its affiliates that the information presented is material. Smartsheet does not intend to make publicly available any update or other revision to the Financial Projections, except as otherwise required by law.
SMARTSHEET DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE NO LONGER APPROPRIATE.
Neither Smartsheet nor any of its affiliates, advisors, officers, directors, or representatives has made or makes any representation or warranty to any of our shareholders or other person regarding the ultimate performance of Smartsheet compared to the information contained in the Financial Projections or that the Financial Projections will be achieved. Smartsheet makes and has made no representation to Parent or Merger Sub, in the Merger Agreement or otherwise, concerning the Financial Projections. The Financial Projections are subjective in many respects and are thus subject to interpretation. Please also refer to the section of this proxy statement captioned “Forward-Looking Statements.”
The Financial Projections were not prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information, or U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Smartsheet may not be comparable to similarly titled amounts used by other companies. The financial measures included in the Financial Projections are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure were not provided to or relied upon by the Board of Directors or Qatalyst.
The Financial Projections included in this document have been prepared by, and are the responsibility of, Smartsheet’s management. Neither Smartsheet’s independent registered public accounting firm, Deloitte & Touche LLP, nor any other independent accountants have compiled, examined or performed any procedures with respect to the Financial Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the Financial Projections. The report of Deloitte & Touche LLP incorporated by reference into this proxy statement relates solely to
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Smartsheet’s previously issued financial statements. It does not extend to the Financial Projections and should not be read to do so.
The following table presents a summary of the Financial Projections (in millions):

Fiscal year ending January 31,

Q3-Q4
2025
202620272028202920302031203220332034
2035
Revenue
$586 $1,318 $1,576 $1,890 $2,270 $2,707 $3,184 $3,680 $4,177 $4,660 $5,119 
Non-GAAP Operating Income(1)
121 293 411 506 613 758 925 1,107 1,300 1,499 1,700 
Unlevered Free Cash Flow(2)
144 293 364 465 566 689 831 984 1,144 1,305 1,469 
___________
(1)Non-GAAP Operating Income, a non-GAAP financial measure, is calculated by starting with GAAP operating income (loss) and adjusting to exclude share-based compensation expense, amortization of acquisition-related intangible assets, and lease restructuring costs.
(2)Unlevered Free Cash Flow, a non-GAAP financial measure, is calculated as Non-GAAP Operating Income, subtracting the impact of cash taxes paid, and adding or subtracting (as applicable) the net impact of depreciation and amortization, capital expenditures and capitalized internal-use software development costs, and changes in net working capital.
Interests of Smartsheet’s Directors and Executive Officers in the Merger
When considering the recommendation of the Board of Directors that you vote to approve the Merger Proposal, you should be aware that our directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of our shareholders generally, including as described below. The Board of Directors was aware of and considered these interests to the extent that they existed at the time, among other matters, in evaluating, negotiating and approving the Merger Agreement and the Merger, and in recommending that the Merger Agreement be adopted by Smartsheet’s shareholders.
Smartsheet’s executive officers at any time since February 1, 2023, the first day of Smartsheet’s 2024 fiscal year (referred to in this section as “executive officers”) are as follows:
NamePosition
Mark P. Mader
President, Chief Executive Officer and Director
Pete Godbole
Chief Financial Officer and Treasurer
Praerit Garg
President, Product & Innovation
Maxwell J. Long
President, Go-to-Market
Jolene Marshall
Chief Legal Officer and Secretary
Michael Arntz*
Former Chief Revenue Officer and Executive Vice President of Worldwide Field Operations
Andrew Bennett**
Former Chief Marketing Officer
Stephen Branstetter***
Former Chief Operating Officer
___________
*Mr. Arntz resigned from his position, effective March 31, 2024, and served as an advisor through mid-May 2024.
**Mr. Bennett resigned from his position, effective March 25, 2024.
***Mr. Branstetter resigned from his position, effective September 18, 2024 and will continue to serve the Company as an advisor through November 18, 2024.
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Treatment of Company Equity Awards
Pursuant to the terms of the Merger Agreement, at the Effective Time:
•Each Vested Company Option will be canceled and converted into the right to receive an amount in cash, without interest, equal to the Vested Option Consideration (i.e., the product obtained by multiplying (i) the excess, if any, of (a) the Merger Consideration over (b) the per-share exercise price for such Vested Company Option, by (ii) the total number of shares of our common stock underlying such Vested Company Option), subject to any required withholding of taxes.
•Each Unvested Company Option will be canceled and converted into the contingent right to receive a Converted Cash Award with respect to an amount in cash equal to the product obtained by multiplying (i) the excess, if any, of (a) the Merger Consideration over (b) the per share exercise price for such Unvested Company Option, by (ii) the total number of shares of our common stock underlying such Unvested Company Option, with such amount subject to any required withholding of taxes.
•Each Company Option, whether vested or unvested, with an exercise price that is equal to or greater than the Merger Consideration will be canceled without any cash payment or other consideration being made in respect of such Company Option.
•Each Vested Company RSU (i.e., a Company RSU that is outstanding as of immediately prior to the Effective Time and is either (i) held by a non-employee member of the Board of Directors (whether vested or unvested) or (ii) vested in accordance with its terms but not yet settled as of the Effective Time) will be canceled and converted into the right to receive an amount in cash, without interest, equal to the Vested RSU Consideration (i.e., the product obtained by multiplying (a) the total number of shares of our common stock underlying such Vested Company RSU, by (b) the Merger Consideration, subject to any required withholding of taxes), subject to any required withholding of taxes.
•Each Unvested Company RSU will be canceled and converted into the contingent right to receive a Converted Cash Award with respect to an amount in cash equal to the product obtained by multiplying (i) the total number of shares of our common stock underlying such Unvested Company RSU, by (ii) the Merger Consideration, with such amount subject to any required withholding of taxes.
•Each Vested Company PSU will be canceled and converted into the right to receive an amount in cash, without interest, equal to the Vested PSU Consideration (i.e., the product obtained by multiplying (i) the number of shares of our common stock underlying such Vested Company PSU, by (ii) the Merger Consideration), subject to any required withholding of taxes.
•The achievement of applicable performance metrics of each Unvested Company PSU for which the applicable performance period has not been completed, will be determined, prior to the Effective Time in good faith by the Board of Directors or a committee thereof in accordance with the terms of the applicable Company PSU award agreement (any achieved Unvested Company PSUs, the “Achieved Unvested Company PSUs”), with the relative total shareholder return (“TSR”) performance metric (as defined in each Company PSU award agreement) to be determined as of a date not less than one week nor more than three weeks prior to the Effective Time. Each Achieved Unvested Company PSU will be canceled and converted into a Converted Cash Award with respect to an amount in cash equal to the product obtained by multiplying (i) the number of shares of our common stock underlying such Achieved Unvested Company PSU, by (ii) the Merger Consideration, with such amount subject to any required withholding of taxes.
Subject to the holder’s continued service with Parent and its affiliates (including the Surviving Corporation and its subsidiaries) through the applicable vesting dates, any Converted Cash Awards converted as described above will vest and become payable at the same time as the Company Equity Award from which such Converted Cash Award was converted would have vested pursuant to its terms and will otherwise remain subject to the same terms and conditions as were applicable to the underlying Company Equity Award immediately prior to the Effective Time,
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including vesting acceleration terms (except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes as in the reasonable and good faith determination of Parent are appropriate to conform the administration of the Converted Cash Awards, provided that no such changes shall adversely affect the rights of the applicable holder unless necessary to comply with applicable law).
The following tables set forth, for each current executive officer and director of Smartsheet and each person who has been a director or executive officer of Smartsheet at any time since February 1, 2023 (solely to the extent they hold outstanding Company Equity Awards), (i) the number of shares of our common stock underlying each of the Vested Company Options, Unvested Company Options, Vested Company RSUs, Unvested Company RSUs, Vested Company PSUs and Unvested Company PSUs that were held as of October 18, 2024 and (ii) the cash consideration that may become payable for these Company Options, Company RSUs and Company PSUs based on the Merger Consideration of $56.50 per share if the applicable vesting conditions are ultimately satisfied following the Effective Time. The vesting of Company RSUs outstanding as of the date of the Closing (which date, solely for purposes of this proxy statement, is assumed to be October 18, 2024) that are held by Smartsheet’s non-employee directors will be accelerated in full (i.e., “single-trigger”) pursuant to the Smartsheet 2018 Equity Incentive Plan. Each current Smartsheet executive officer is eligible for vesting acceleration of his or her outstanding and unvested Company Equity Awards in connection with certain qualifying terminations of employment (i.e., “double trigger”) under his or her Severance Arrangement, as defined and described in more detail below in the section captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger — Potential Severance Payments and Benefits.”
The outstanding Company PSUs are subject to the achievement of certain relative TSR performance metrics for the performance periods ending December 2024 and December 2025. Pursuant to the terms of the Company PSU award agreements, the relative TSR performance metrics will be measured prior to the Closing based on the actual level of performance measured through such date using the Merger Consideration, with the Company PSUs earned during such period reduced by the number of Company PSUs previously earned during a prior performance period, as applicable. For purposes of the table below, the performance achievement and the resulting number of shares underlying the Company PSUs have been estimated in accordance with the terms of the Company PSU award agreements and based on performance measured as of October 18, 2024 and the Merger Consideration. Accordingly, such Company PSUs are included in the calculation below based on estimated achievement as of October 18, 2024; however, the level of actual achievement may be higher or lower than the value included in the table below. Pursuant to the terms of the Company PSUs, a pro rata portion of the Achieved Unvested Company PSUs based on the number of days served out of the original total performance period will vest as of the date of the Closing (which date, solely for purposes of this proxy statement, is assumed to be October 18, 2024), and such Company PSUs are reflected as Vested Company PSUs in the table below. The balance of the achieved Company PSUs will vest
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following the Closing through the end of the original total performance period if the applicable time-based vesting conditions are satisfied, and such Company PSUs are reflected as Unvested Company PSUs in the table below.
Vested Company RSU Awards
(#)
Cash Consideration for Vested Company RSU Awards
($)
Vested Company Option Awards
(#)
Cash Consideration for Vested Company Option Awards
($)
Non-Employee Directors
Alissa Abdullah
4,864 $274,816 — — 
Geoffrey T. Barker
4,864 $274,816 25,000 $1,351,000 
Brent Frei
— $— — — 
Elena Gomez
— $— — — 
Michael Gregoire
4,864 $274,816 — — 
Matthew McIlwain
4,864 $274,816 — — 
Katie Rooney
9,197 $519,631 — — 
Khozema Shipchandler
10,145 $573,193 — — 
Rowan Trollope
4,864 $274,816 — — 
James N. White
4,864 $274,816 — — 
Magdalena Yesil
4,864 $274,816 130,000 $6,658,600 
NameUnvested Company
RSU Awards
(#)
Contingent Cash
Consideration
for Unvested Company
RSU Awards ($)
Vested Company
Option Awards
(#)
Cash
Consideration
for Vested
Company
Option Awards
($)
Unvested Company
Option Awards
(#)		Cash
Consideration
for Unvested
Company
Option Awards
($)		Company
Vested PSU
Awards
(#)		Cash
Consideration
for Vested
Company
PSU Awards
($)		Company
Unvested PSU
Awards
(#)		Cash
Consideration
for Unvested
Company
PSU Awards
($)
Executive Officers
Mark P. Mader
184,506 $10,424,589 1,417,764 $55,677,911 73,507 $715,697 219,934 $12,426,271 83,402 $4,712,213 
Pete Godbole
115,240 $6,511,060 118,300 $393,382 29,651 $281,046 47,481 $2,682,677 19,325 $1,091,863 
Stephen Branstetter*
14,516 $820,154 124,969 $3,266,237 3,454 $30,615 — — — — 
Praerit Garg
111,833 $6,318,565 257,092 $4,843,893 25,470 $255,309 44,794 $2,530,861 19,136 $1,081,184 
Jolene Marshall
68,260 $3,856,690 49,091 $440,228 23,548 $255,309 23,967 $1,354,136 11,677 $659,751 
Maxwell J. Long
169,659 $9,585,734 — — — — 92,448 $5,223,312 124,155 $7,014,758 
___________
*Mr. Branstetter resigned from his role as Chief Operating Officer effective September 18, 2024 and will continue to provide consulting services to us through November 18, 2024. For so long as Mr. Branstetter continues to provide services to Smartsheet, his Company Options, Company RSUs, and Company PSUs will continue to vest according to their terms. The table above includes only Mr. Branstetter’s Company Options that are currently vested or that may vest prior to November 18, 2024 and his Company RSUs that may vest prior to November 18, 2024. The table above excludes Mr. Branstetter’s Company Options, Company RSUs and Company PSUs that are not scheduled to vest prior to November 18, 2024 and as a result will be canceled upon the conclusion of Mr. Branstetter’s services. For more information regarding Mr. Branstetter’s separation and release agreement, please see the section captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger — Potential Severance Payments and Benefits.”
Potential Severance Payments and Benefits
Each of our executive officers is eligible to receive severance benefits under a change in control severance agreement entered into with Smartsheet (referred to as a “Severance Arrangement”). Under each of the Severance Arrangements, in the event of a termination without “cause” or resignation for “good reason” (in each case, as defined in the applicable Severance Arrangement), in each case, (i) within 12 months following a “change in control” (as defined in the applicable Severance Arrangement), which the Merger will constitute, or (ii) within three months preceding a “change in control,” but as to clause (ii) only if the termination occurs following the execution of a definitive agreement for a corporate transaction which, if consummated, would constitute a “change in
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control” (a “CIC Qualifying Termination”), each executive will be entitled to the following “double-trigger” payments and benefits:
•a lump sum cash payment equal to six months of base salary (12 months for Mr. Mader) as in effect immediately prior to the executive’s termination or resignation or the change in control, whichever is greater;
•a lump sum cash payment equal to the executive’s annual bonus for the year in which such termination or resignation occurs, based on 100% of target performance and prorated for the number of actual days worked in the then-current fiscal year prior to the executive’s termination or resignation; and
•100% accelerated vesting of all then-outstanding unvested equity awards, other than awards that vest only upon satisfaction of performance criteria and, in the case of an equity award with performance-based vesting, the vesting shall accelerate as set forth in the terms of the applicable performance-based equity award agreement, as described below.
The treatment of outstanding Company PSUs is described in more detail in the section captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger — Treatment of Company Equity Awards” above. Pursuant to the Company PSU award agreements, the portion of the Achieved Unvested Company PSUs that is earned upon a change in control and does not pro-rata vest at such time will remain outstanding and vest in equal quarterly installments through the end of the applicable performance period. Any such Achieved Unvested Company PSUs subject to time-based vesting will be eligible for “double-trigger” acceleration as set forth in the Severance Arrangement in the event of a CIC Qualifying Termination, as described above.
In exchange for a release of claims in favor of the Company and its affiliates, Mr. Branstetter will receive a cash severance payment following the conclusion of his services (anticipated to occur in November 2024) equal to the value of the second tranche of his Company PSUs that would have vested on December 5, 2024, less applicable taxes and withholdings. Such value will be determined in December 2024 in accordance with the terms of the PSU award agreements. All of Mr. Branstetter’s then-unvested Equity Awards will be canceled on his final day of service on November 18, 2024. See the table in the section above captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards” for information regarding Mr. Branstetter’s Company Equity Awards that may vest prior to such date.
If any of the amounts provided for under the Severance Arrangements or otherwise payable to an executive officer would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to the related excise tax under Section 4999 of the Internal Revenue Code, then the executive officer will be entitled to receive either full payment of benefits under his or her Severance Arrangement or such lesser amount that would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the executive officer.
The severance payments and benefits described in this section are subject to the execution and effectiveness of a waiver and release of claims in favor of Smartsheet.
For an estimate of the value of the payments and benefits described above that would be payable to our named executive officers upon a CIC Qualifying Termination, see the section captioned “— Quantification of Potential Payments and Benefits to our Named Executive Officers” below. The estimated aggregate amount that would be payable to our executive officers who are not named executive officers upon a CIC Qualifying Termination based on the assumptions set forth in the section captioned “— Quantification of Potential Payments and Benefits to our Named Executive Officers” below or as otherwise described in this section is $23.3 million.
Treatment of Fiscal Year 2025 Bonuses
Pursuant to the Merger Agreement, if the Company’s annual bonuses for fiscal year 2025, based on achievement of the applicable performance metrics, have not been paid prior to the Closing, Parent will cause such
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payments to be made to the applicable participants, including the current executive officers, upon the earlier of (i) the time annual bonus payments are customarily paid by the Company (and no later than March 31, 2025), subject to the participant’s continued employment by the Company or its subsidiaries through the applicable final measurement date under the fiscal 2025 bonus plan and (ii) such participant’s termination without cause (as defined in the Severance Arrangement). Any such bonus payment would take into account any bonus payable in respect of fiscal year 2025 pursuant to a Severance Arrangement.
280G Mitigation Actions
Following Parent’s prior approval, the Company may take certain actions to mitigate the amount of potential “excess parachute payments” for “disqualified individuals” (each as defined in Section 280G of the Code). As of the date of this information statement, the Company has not yet approved any specific actions to mitigate any impact of Section 280G of the Code on the Company or any disqualified individuals. No executive officer is entitled to receive gross-ups or tax reimbursements from the Company with respect to any potential excise taxes under Section 4999 of the Code.
Indemnification and Insurance of Directors and Officers
The Merger Agreement provides for certain indemnification, expense advancement and exculpation rights from and after the Effective Time in favor of each current and former director or officer of Smartsheet and our subsidiaries (a “D&O Indemnitee”) with respect to matters existing or occurring at or prior to the Effective Time. In addition, Parent has agreed to cause the Surviving Corporation, (i) to maintain for a period of not less than six years from the Effective Time provisions in the respective articles of incorporation, bylaws, and other organizational documents of Smartsheet and our subsidiaries concerning the indemnification and exculpation (including provisions relating to expense advancement) of the D&O Indemnitees, providing substantially equivalent benefits to those persons as the provisions of the articles of incorporation, bylaws, indemnification agreements, and other organizational documents of Smartsheet and our subsidiaries provide, as applicable, in each case, as of the date of the Merger Agreement and (ii) not to amend, repeal, or otherwise modify such provisions in any respect that would adversely affect the rights of D&O Indemnitees thereunder, in each case, except as required by applicable law.
The Merger Agreement also provides that, for a period of six years from the Effective Time, Parent will cause the Surviving Corporation to maintain in effect directors’ and officers’ liability insurance covering those persons who are currently covered by the directors’ and officers’ liability insurance policies of Smartsheet and our subsidiaries, providing substantially equivalent benefits to such current insurance coverage. Alternatively, in lieu of maintaining such insurance for a period of six years, Smartsheet may, or Parent may cause the Surviving Corporation to, cause coverage to be extended under the current directors’ and officers’ liability insurance by obtaining at or prior to the Closing a prepaid, non-cancelable six year “tail” policy (providing substantially equivalent benefits to such current insurance coverage) with respect to matters existing or occurring at or prior to the Effective Time (a “Tail Policy”). In no event will Parent or the Surviving Corporation be required to expend for such policies an aggregate or total premium amount in excess of 350% of the last annual premium paid by Smartsheet prior to the date of the Merger Agreement (the “Maximum Premium”). If no such Tail Policy is available for less than the Maximum Premium, then Smartsheet or the Surviving Corporation shall obtain as much coverage as reasonably practicable for the Maximum Premium.
Post-Closing Compensation
Representatives of Parent may hold preliminary discussions with certain members of the Company’s management team regarding employment with, and the right to purchase or participate in the equity of, Parent or one or more of its affiliates. However, as of the date of this proxy statement, none of the Company’s directors or executive officers has entered into any agreement or understanding with respect to the foregoing, and there can be no assurances that the terms of any such agreements or arrangements will be agreed upon with any directors or executive officers in the future. If Parent or its affiliates and the Company’s executive officers do not enter into agreements regarding employment with Parent or its affiliates, then the Company’s executive officers will remain subject to their existing arrangements with the Company.
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Quantification of Potential Payments and Benefits to our Named Executive Officers
In accordance with Item 402(t) of Regulation S-K, the below table sets forth the amount of payments and benefits that each of our named executive officers would or may receive or retain that is based on or otherwise relates to the Merger. The compensation that may be paid or become payable to our named executive officers in connection with the Merger is subject to approval, on an advisory (non-binding) basis, by our shareholders, as described below in the section captioned “Proposal 2: Compensation Paid to Named Executive Officers in Connection with the Merger.”
Please note that the amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described in footnotes to the table. For purposes of determining the potential payments in the table below, we have assumed that:
(i)the relevant price per share of Smartsheet common stock is $56.50, which is equal to the Merger Consideration;
(ii)the Effective Time is October 18, 2024, the latest practicable date prior to the filing of this proxy statement;
(iii)except where otherwise described below, each named executive officer’s employment is subject to a qualifying termination (a termination without “cause,” or resignation for “good reason”), in either case immediately following the Effective Time;
(iv)each named executive officer’s base salary rate and annual target bonus remain unchanged from those in effect as of October 18, 2024;
(v)each named executive officer’s Company Equity Awards are those outstanding as of October 18, 2024, without forecasting of any vesting, deferrals or forfeitures following such date; and
(vi)the performance achievement and the resulting number of shares underlying the Company PSUs for which the applicable performance period has not been completed as of October 18, 2024 have been determined in accordance with the terms of the Company PSU agreements and based on performance measured as of October 18, 2024. Accordingly, such Company PSUs are included in the calculation below based on estimated achievement as of October 18, 2024; however, the level of actual achievement may be higher or lower than the value included in the table below.
Some of the assumptions used in the table below are based upon information not currently available and the actual amounts payable to our named executive officers will depend on whether the named executive officer experiences a qualifying termination, the date of termination (if any) and the terms of the plans or agreements in effect at such time, and accordingly may differ materially from the amounts set forth below. Additional detail regarding the named executive officers’ interests in the Merger is provided in the section of this proxy statement captioned “The Merger—Interests of Smartsheet’s Directors and Executive Officers in the Merger.”
Golden Parachute Compensation
Names
Cash($)(1)
Equity
Awards($)(2)
Total($)
Mark Mader
$1,200,000 $28,278,770 $29,478,770 
Pete Godbole
$562,500 $10,566,646 $11,129,146 
Praerit Garg
$525,000 $10,185,919 $10,710,919 
Jolene Marshall
$440,000 $6,125,886 $6,565,886 
Michael Arntz(3)
— — — 
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__________
(1)The amounts shown in this column reflects the amount of “double-trigger” cash payments to which the named executive officers may become entitled under the applicable Severance Arrangement and the amount of each named executive officer’s fiscal 2025 annual bonus. The amounts under the Severance Arrangement become payable if during the 12-month period following or the three-month period preceding the Effective Time (only if the termination occurs following the execution of a definitive agreement for a corporate transaction which, if consummated would constitute a “change in control”), Smartsheet terminates their employment with Smartsheet without “cause” or they resign for “good reason,” as such terms are defined in the applicable Severance Arrangement, subject to the named executive officer timely executing and not revoking a waiver and release of claims in favor of Smartsheet. The Severance Arrangements provide for a lump-sum cash severance payment equal to the sum of (i) an amount equal to six months (12 months for Mr. Mader) of the named executive officer’s base salary (see “Base Salary Component of Severance” column in the table below), plus (ii) an amount equal to the named executive officer’s annual bonus amount for the year in which such termination or resignation occurs, based on 100% of target performance and prorated for the number of actual days worked in the then-current fiscal year prior to the named executive officer’s termination or resignation. Pursuant to the Merger Agreement, if the Company’s annual bonuses for fiscal year 2025, based on achievement of the applicable performance metrics, have not been paid prior to the Closing, Parent will cause such payments to be made to the applicable participants upon a participant’s earlier termination without “cause.” Accordingly, the “Bonus Component of Severance” column in the table below conservatively shows a full year’s annual bonus based on target performance. Mr. Godbole and Mr. Garg participate in the Company’s Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). In the event that the Deferred Compensation Plan is terminated in connection with the Merger or if either of the participant’s service is terminated, their deferred amounts under the Deferred Compensation Plan may be paid upon such events. Such payments will not increase the aggregate cash severance and equity acceleration amounts indicated in the table above.
Named Executive Officer
Base Salary Component
of Severance($)
Bonus
Component of
Severance($)
Total($)
Mark Mader
$600,000 $600,000 $1,200,000 
Pete Godbole
$225,000 $337,500 $562,500 
Praerit Garg
$210,000 $315,000 $525,000 
Jolene Marshall
$200,000 $240,000 $440,000 
(2)The treatment of outstanding Company Equity Awards is described in more detail in the sections above captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards” and “Interests of Smartsheet’s Directors and Executive Officers in the Merger—Potential Severance Payments and Benefits.” Amounts shown in this column represent the value of accelerated vesting of outstanding Company Equity Awards (with the performance metrics applicable to the Company PSUs determined as described in the section of this proxy statement captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards”). At the Effective Time, any unvested Company Equity Awards will be canceled and converted into the contingent right to receive a Converted Cash Award, generally subject to the same vesting terms and conditions as were applicable to the underlying Company Equity Award immediately prior to the Effective Time.
Upon a qualifying termination of employment under the Severance Arrangements (as described in more detail under note (1) above), the current named executive officers would be entitled to “double-trigger” vesting of outstanding unvested equity awards, subject to timely execution and not revocation of a waiver and release of claims in favor of Smartsheet.
Pursuant to the terms of the Company PSUs, a pro rata portion of the Achieved Unvested Company PSUs based on the number of days served out of the original total performance period will vest as of the date of the Closing, (i.e., “single-trigger” as to a pro rata portion). The balance of the Achieved Unvested Company PSUs will vest following the Closing through the end of the original total performance period if the applicable time-based vesting conditions are satisfied, and are eligible for “double-trigger” acceleration in full as set forth in the Severance Arrangement.
The estimated amount of Vested Option Consideration payable in respect of each named executive officer’s Vested Company Options is set forth in the section captioned “Interests of Smartsheet’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards.”
Named Executive Officer
Estimated Value of Unvested Company
Options ($)
Estimated Value of Unvested
Company RSUs($)
Estimated Value of Unvested Company PSUs (single-trigger)($)
Estimated Value of Unvested Company
PSUs (double-trigger)($)
Total($)
Mark Mader
$715,697 $10,424,589 $12,426,271 $4,712,213 $28,278,770 
Pete Godbole
$281,046 $6,511,060 $2,682,677 $1,091,863 $10,566,646 
Praerit Garg
$255,309 $6,318,565 $2,530,861 $1,081,184 $10,185,919 
Jolene Marshall
$255,309 $3,856,690 $1,354,136 $659,751 $6,125,886 
(3)Mr. Arntz is our former Chief Revenue Officer and Executive Vice President of Worldwide Field Operations. Mr. Arntz resigned effective March 31, 2024 and continued to serve as an independent contractor until May 17, 2024. Mr. Arntz waived all severance entitlements. In addition, all of Mr. Arntz’s unvested Company Equity Awards were forfeited for no consideration when he ceased to provide service as an independent contractor. As a result, the Golden Parachute Compensation table shows no amounts for Mr. Arntz, and he is not listed in the two tables above.
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Financing of the Merger; Damages Commitment
The obligation of Parent and Merger Sub to consummate the Merger is not subject to any financing condition. In connection with the financing of the Merger, each Equity Investor entered into an Equity Commitment Letter with Parent, pursuant to which, among other things, BX IX, VEPF VIII, and Platinum Falcon will provide Parent with an equity commitment of up to $2,105,000,000, $1,753,000,000, and $900,000,000 in cash, respectively, which may be reduced in accordance with the terms set forth in their respective Equity Commitment Letter. The Equity Financing Commitments will be available to Parent (subject to the terms and conditions set forth therein), together with available cash on hand of Smartsheet and any third party financing obtained by Parent or its affiliates as of the Closing, to fund the payment of (i) the aggregate Merger Consideration, Vested Company Option Consideration, Vested Company RSU Consideration, and the Vested Company PSU Consideration and (ii) the fees and expenses to the extent required to be paid by Parent or Merger Sub in cash on the Closing Date in connection with the Closing. Smartsheet can enforce Parent’s right to cause the equity commitment to be funded under each Equity Commitment Letter against each applicable Equity Investor subject to the terms and conditions of the relevant Equity Commitment Letter and, under the terms of the Merger Agreement, Smartsheet has the right to specifically enforce Parent’s obligation to consummate the Merger, subject to, among other conditions, the satisfaction of the conditions to Parent’s and Merger Sub’s obligations to consummate the Merger as set forth in the Merger Agreement.
Subject to the terms and conditions of the Limited Guaranties entered into by each Equity Investor, each Equity Investor has agreed to severally guarantee its pro rata share of the due and punctual payment by Parent to Smartsheet of (i) the Parent Termination Fee if and when payable by Parent to Smartsheet pursuant to the terms of the Merger Agreement, (ii) any costs of recovery and interest payable by Parent if the Parent Termination Fee is not paid when due pursuant to the terms of the Merger Agreement, (iii) any reimbursement or indemnification obligations pursuant to the debt cooperation covenants in the Merger Agreement, and (iv) any monetary damages payable due to Parent’s fraud or willful and material breach of the Merger Agreement prior to termination thereof (collectively referred to as “Guaranteed Obligations”), subject to a cap equal to (a) $223,412,000 for BX IX, (b) $186,042,000 for VEPF VIII; and (c) $95,546,000 for Platinum Falcon.
Subject to specified exceptions, each Limited Guaranty will terminate upon the earliest of:
•the consummation of the Closing;
•the termination of the Merger Agreement in accordance with the terms therein except in the case of Smartsheet Termination. For purposes of this proxy statement, “Smartsheet Termination” means termination of the Merger Agreement by Smartsheet if (i) conditions required for the Closing have been satisfied or waived; (ii) the Parent fails to consummate the Closing; and (iii) Smartsheet has confirmed in a written notice delivered to the Company in accordance with the Merger Agreement that it is ready and able to consummate the Closing;
•the date that is 90 days following the termination of the Merger Agreement following the Smartsheet Termination unless, prior to the expiration of such 90-day period, Smartsheet has delivered a written notice to Parent or an Equity Investor with respect to a claim for payment of the Guaranteed Obligations (or if Smartsheet has made a claim under a Limited Guaranty prior to such 90th day, the date that such claim is finally satisfied or otherwise resolved); and
•the date when obligations under such Limited Guaranty equal to the applicable cap are paid in full.
Closing and Effective Time
Unless otherwise mutually agreed in writing between Smartsheet, Parent, and Merger Sub, the Closing will take place on the date which is two business days (unless, if the last condition to Closing to be satisfied under the Merger Agreement is the Smartsheet shareholder approval, four business days) after the date on which all of the conditions to Closing (as described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”), have been satisfied or waived (if such waiver is permissible under the Merger Agreement or under
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applicable law), other than those conditions that, by their nature, are to be satisfied at the closing of the Merger, but subject to the satisfaction or waiver of such conditions.
The Effective Time will occur upon the filing and acceptance of the articles of merger with respect to the Merger in accordance with the WBCA, with the Secretary of State of the State of Washington, or at such later time as is agreed upon in writing by the parties and specified in the articles of merger.
Delisting and Deregistration of Smartsheet Common Stock
If the Merger is completed, Smartsheet common stock will no longer be traded on the NYSE and will be deregistered under the Exchange Act. Smartsheet will no longer be required to file periodic reports, current reports, and proxy and information statements with the SEC on account of Smartsheet common stock.
Dissenters’ Rights
General
Under Chapter 23B.13 of the WBCA, instead of receiving the Merger Consideration that a holder of Smartsheet common stock would otherwise be entitled to pursuant to the Merger Agreement, holders of Smartsheet’s common stock are entitled to dissent from the Merger and to obtain payment of the fair value of their shares of Smartsheet common stock in cash together with accrued interest from the effective time if the Merger is consummated. The following summarizes the material rights of holders of Smartsheet common stock under Chapter 23B.13. You should read the applicable sections of Chapter 23B.13, a copy of which is attached as Annex D to this proxy statement, and which governs dissenters’ rights. The summary below is qualified in its entirety by reference to Chapter 23B.13, and such statute, and not this summary, governs the exercise and perfection of dissenters’ rights.
Pursuant to Chapter 23B.13.200 of the WBCA, when a proposed merger is to be submitted to a vote at a meeting of shareholders, as in the case of the special meeting, the meeting notice must state that shareholders are or may be entitled to assert dissenters’ rights under Chapter 23B.13 and must be accompanied by a copy of Chapter 23B.13. The notice of the special meeting included with this proxy statement constitutes notice to the holders of Smartsheet common stock of their dissenters’ rights, and a copy of Chapter 23B.13 is attached as Annex D to this proxy statement.
If you are contemplating the possibility of exercising your dissenters’ rights in connection with the Merger, you should carefully review the text of Chapter 23B.13 of the WBCA. If you do not fully and precisely satisfy the procedural requirements of Chapter 23B.13, you will forfeit your dissenters’ rights. If any holder of shares of Smartsheet common stock who asserts dissenters’ rights under the WBCA withdraws or forfeits (through failure to perfect or otherwise) the right to obtain payment for such holder’s shares under Chapter 23B.13, then such shareholder’s shares will be converted, or will be treated as if they had been converted, into the right to receive the merger consideration, without interest and subject to any applicable withholding of taxes. Smartsheet will not provide you with any notice regarding your dissenters’ rights other than as described in this proxy statement and the notice of the special meeting included with this proxy statement.
Requirements for Exercising Dissenters’ Rights
If you wish to assert your dissenters’ rights, you must:
•deliver to Smartsheet, before the vote is taken at the special meeting regarding the Merger Agreement, written notice of your intent to demand payment for your shares of Smartsheet common stock if the Merger is effected, which notice must be separate from your proxy. Your vote against the Merger Agreement alone will not constitute written notice of your intent to assert your dissenters’ rights;
•not vote your shares in favor of the Merger Agreement; and
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•follow the statutory procedures for perfecting dissenters’ rights under Chapter 23B.13 of the WBCA, which are summarized below under the heading “Dissenters’ Rights Procedures.”
If you fail to comply with these requirements, and should the Merger Agreement be approved by Smartsheet’s shareholders and the Merger is completed, your shares of Smartsheet common stock will be converted into the right to receive the Merger Consideration, without interest and less any applicable withholding of taxes, and you will have forfeited your dissenters’ rights with respect to your shares of Smartsheet common stock. Shareholders should note that the summary of dissenters’ rights presented in this proxy statement is not complete. Shareholders wishing to dissent from the Merger and receive payment for the fair value of their shares must follow the statutory requirements in their entirety. Any failure to do so will result in a forfeiture of dissenters’ rights.
Written notice of your intent to assert dissenters’ rights must be delivered to Smartsheet at:
Smartsheet Inc.
500 108th Ave NE, Suite 200
Bellevue, Washington 98004
Attn: Corporate Secretary
(844) 324-2360
This written notice must be delivered before the vote to approve the Merger Proposal is taken at the special meeting. Your written notice to demand payment should specify your name and mailing address, the number of shares of Smartsheet common stock you own, and that you intend to demand payment of the “fair value” of your shares of Smartsheet common stock if the Merger Agreement is approved.
Vote
You must not vote in favor of, or consent in writing to, the approval of the Merger Agreement. A vote in favor of the approval of the Merger Agreement, by proxy or via the Internet will constitute a waiver of your dissenters’ rights in respect of the shares so voted and will nullify any previously filed written notices of your intent to assert dissenters’ rights. A proxy that does not contain voting instructions will, unless revoked, be voted in favor of the approval of the Merger Agreement. Therefore, a shareholder who votes by proxy and who wishes to exercise dissenters’ rights must vote against the Merger Agreement or abstain from voting on the Merger Agreement.
Termination of Dissenters’ Rights
Your right to obtain payment of the fair value of your shares of Smartsheet common stock under Chapter 23B.13 of the WBCA will terminate if:
•the Merger is abandoned or rescinded;
•you fail to comply with all requirements set forth in Chapter 23B.13;
•a court having jurisdiction permanently enjoins or sets aside the Merger; or
•your demand for payment is withdrawn with Smartsheet’s written consent.
Dissenters’ Rights Procedures
If the Merger Agreement is approved by Smartsheet shareholders, within 10 days after the effective date of the Merger, Smartsheet will send written notice regarding the proper procedures for dissenting to all shareholders who
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have given written notice under Chapter 23B.13 of the WBCA to the address above and have not voted in favor of approval of the Merger Agreement. The notice will:
•state where the demand for payment and certificates representing certificated shares of Smartsheet common stock must be sent and when certificates for certificated shares must be deposited;
•inform holders of uncertificated shares as to what extent transfer of the shares will be restricted after the payment demand is received;
•include a form for demanding payment that includes the date of the first announcement to the news media or to shareholders of the terms of the Merger (which was September 24, 2024) and requires that the person asserting dissenters’ rights certify whether or not the person acquired beneficial ownership of Smartsheet common stock before that date;
•indicate the date by which Smartsheet must receive a payment demand, which date will not be fewer than 30 or more than 60 days after the date the written notice is delivered to shareholders; and
•include a copy of Chapter 23B.13.
If you wish to assert dissenters’ rights, no later than the date set forth in the notice described above you must demand payment, certify whether you acquired beneficial ownership of your shares before September 24, 2024, and deliver your shares in accordance with the terms of the notice. Failure to do so by the date set forth in the notice will cause you to forfeit the right to obtain payment of the fair value for your shares under Chapter 23B.13 of the WBCA.
If the Merger is not consummated within 60 days after the date set for demanding payment and depositing share certificates, then Smartsheet will be required to return all deposited certificates and release any transfer restrictions imposed on uncertificated shares. If, after returning the deposited certificates and releasing transfer restrictions, the parties to the Merger Agreement wish to consummate the Merger, Smartsheet must send a new dissenters’ rights notice and repeat the payment demand procedure.
Within 30 days after the later of the effective date of the Merger or the date the payment demand is received, Smartsheet shall pay each dissenting shareholder who complied with the payment demand and related requirements of Chapter 23B.13.230 of the WBCA (other than dissenting shareholders who acquired their shares of Smartsheet common stock after September 24, 2024, 2024, if Smartsheet elects to withhold payment as described below) the amount that Smartsheet estimates to be the fair value of the shareholder’s shares, plus accrued interest. For purposes of Chapter 23B.13, “fair value” with respect to a dissenter’s shares, means the value of the shares immediately before the effective date of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. “Interest” means interest from the effective date of the merger until the date of payment, at the average rate currently paid by Smartsheet on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances. The payment will be accompanied by:
•financial data relating to Smartsheet, including a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any;
•an explanation of how Smartsheet estimated the fair value of the shares;
•an explanation of how Smartsheet calculated the interest;
•a statement of the dissenter’s right to demand supplemental payment if such shareholder believes that the amount paid is less than the fair value of the shares or under certain other circumstances enumerated in Chapter 23B.13.280 and described below; and
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•a copy of Chapter 23B.13.
For dissenting shareholders who were not the beneficial owners of their shares of Smartsheet common stock before September 24, 2024, Smartsheet may elect to withhold payment under Chapter 23B.13 of the WBCA. To the extent that Smartsheet so elects, after consummating the Merger, Smartsheet shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of the dissenter’s demand. Smartsheet will send with its offer an explanation of how it estimated the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter’s right to demand payment of the dissenter’s own estimate of the dissenter’s shares and the amount of interest due if such dissenter believes that the amount offered is less than the fair value of the shares or under certain other circumstances enumerated in Chapter 23B.13.280 and described below.
If you believe that the amount paid or offered by Smartsheet is less than the fair value of your shares or believe that the interest due is incorrectly calculated, or if Smartsheet fails to make payment for your shares within 60 days after the date set for demanding payment or the Merger is not consummated and Smartsheet does not release the transfer restrictions imposed on your shares within 60 days after the date set for demanding payment, you may, within 30 days of the payment or offer for payment, deliver notice to Smartsheet in writing informing it of your own estimate of the fair value of your shares and the amount of interest due, and demand payment of this estimate, less any amount Smartsheet has already paid under Chapter 23B.13 of the WBCA. If any dissenting shareholder’s demand for payment of such dissenting shareholder’s own estimate of the fair value of the shares is not settled within 60 days after receipt by Smartsheet of such shareholder’s demand for payment, Chapter 23B.13 requires that Smartsheet commence a proceeding in King County Superior Court and petition the court to determine the fair value of the shares and accrued interest, naming all the dissenting shareholders whose demands remain unsettled as parties to the proceeding. If Smartsheet does not commence the proceeding within the 60-day period, it will pay each dissenter whose demand remains unsettled the amount demanded.
The jurisdiction of the court in which the proceeding is commenced will be plenary and exclusive. The court may appoint one or more appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers will have the powers described in the order appointing them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings. The fair value of the shares as determined by the court may be less than, equal to or greater than the value of the Merger Consideration to be issued to non-dissenting shareholders for Smartsheet common stock under the terms of the Merger Agreement if the Merger is consummated. Shareholders should be aware that investment banking opinions as to the fairness, from a financial point of view, of the consideration payable in a Merger are not opinions as to fair value under Chapter 23B.13 of the WBCA. Each dissenter made a party to the proceeding is entitled to a judgment (i) for the amount, if any, by which the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by Smartsheet, or (ii) for the fair value, plus accrued interest, of the dissenter’s after-acquired shares for which Smartsheet elected to withhold payment pursuant to Chapter 23B.13.
The court will also determine the costs and expenses of the court proceeding and assess them against Smartsheet, except that the court may assess the costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under Chapter 23B.13 of the WBCA. If the court finds that Smartsheet did not substantially comply with the requirements of Chapter 23B.13.200 through 23B.13.280 of the WBCA, the court may also assess against Smartsheet any fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable. The court may also assess those fees and expenses against any party if the court finds that the party has acted arbitrarily, vexatiously, or not in good faith with respect to dissenters’ rights. If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against Smartsheet, the court may award to counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefited.
A record shareholder may assert dissenters’ rights as to fewer than all of the shares registered in the shareholder’s name only if the shareholder dissents with respect to all shares beneficially owned by any one person and delivers to Smartsheet a notice of the name and address of each person on whose behalf the shareholder asserts
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dissenters’ rights. The rights of a partially dissenting record shareholder are determined as if the shares as to which the dissenter dissents and the dissenter’s other shares were registered in the names of different shareholders. Beneficial owners of Smartsheet common stock who desire to assert dissenters’ rights as to shares held on the beneficial owners’ behalf (i) must submit to Smartsheet the record shareholder’s consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights, which consent shall be set forth either in a record or, if Smartsheet has designated an address, location, or system to which the consent may be electronically transmitted and the consent is electronically transmitted to the designated address, location, or system, in an electronically transmitted record; and (ii) must so assert dissenters’ rights with respect to all shares of which such shareholder is the beneficial shareholder or over which such shareholder has power to direct the vote.
U.S. Federal Income Tax Considerations of the Merger
The following discussion is a summary of certain material U.S. federal income tax considerations that are relevant to U.S. Holders and Non-U.S. Holders (each of which we define below) of shares of our common stock whose shares are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”), Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (which we refer to as the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect.
This discussion is limited to holders who hold their shares of our common stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes). This discussion does not describe any of the tax consequences arising under the laws of any state, local, or non-U.S. tax jurisdiction and does not consider any aspects of the alternative minimum tax or the Medicare net investment income surtax, or U.S. federal tax law other than income taxation (e.g., estate or gift taxation) that may be relevant or applicable to a particular holder in connection with the Merger. For purposes of this discussion, a “holder” means either a U.S. Holder or a Non-U.S. Holder (each as we define below) or both, as the context may require.
This discussion is for general information only and does not purport to be a complete analysis of all of the U.S. federal income tax considerations that may be relevant to particular holders in light of their particular facts and circumstances. For example, this discussion does not address:
•holders who may be subject to special treatment under U.S. federal income tax laws, such as cooperatives, financial institutions or banks; tax-exempt organizations (including private foundations); S corporations; partnerships or any entities or arrangements treated as partnerships or other pass-through entities for U.S. federal income tax purposes; insurance companies; government organizations; mutual funds; retirement plans or other tax-deferred accounts; corporations that accumulate earnings to avoid U.S. federal income tax; dealers or brokers in stocks and securities or foreign currency; traders in securities that elect to use the mark-to-market method of accounting for their securities; holders that purchase or sell shares as part of a “wash sale” for tax purposes; holders holding shares as qualified small business stock for purposes of Sections 1045 and/or 1202 of the Code; holders required to recognize income or gain with respect to the Offer or the Merger no later than such income or gain is required to be reported on an applicable financial statement (as defined in the Code); regulated investment companies; real estate investment trusts; entities subject to the U.S. anti-inversion rules; or certain former citizens or long-term residents of the United States;
•holders who are controlled foreign corporations or passive foreign investment companies;
•holders who are subject to the alternative minimum tax;
•holders holding the shares of our common stock as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;
•holders that received their shares of our common stock in connection with the performance of services;
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•holders who own an equity interest, actually or constructively, in Parent or the Surviving Corporation following the Merger;
•U.S. Holders (as we define below) whose “functional currency” is not the U.S. dollar; or
•holders that do not vote in favor of the Merger and who properly demand appraisal of their shares under Section Chapter 23B.13 of the WBCA.
If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of our common stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares of our common stock and partners therein should consult their tax advisors regarding the consequences of the Merger.
No ruling has been or will be obtained from the IRS regarding the U.S. federal income tax consequences of the Merger described below. Furthermore, no opinion of counsel has been or will be rendered with respect to any tax considerations of the Merger or any related transactions. The use of words such as “will” and “should” in any tax-related discussion contained in this discussion is not intended to convey a particular level of comfort. No assurance can be given that the IRS will agree with the views expressed in this discussion, or that a court will not sustain any challenge by the IRS in the event of litigation.
THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY HOLDER. EACH HOLDER SHOULD CONSULT ITS TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR ANY NON-INCOME TAX LAWS.
U.S. Holders
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of our common stock that is, for U.S. federal income tax purposes, any of the following:
•an individual who is (or is treated as) a citizen or resident of the United States;
•a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
•an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
•a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust; or (ii) the trust has a valid election in effect under applicable Treasury regulations to be treated as a United States person.
The receipt of cash by a U.S. Holder in exchange for shares of our common stock pursuant to the Merger will generally be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder’s gain or loss will be equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares.
Gain or loss recognized by a U.S. Holder in the Merger will generally be capital gain or loss and will generally be long-term capital gain or loss if such U.S. Holder’s holding period in its shares of our common stock is more than one year at the time of the completion of the Merger. A reduced tax rate generally will apply to long-term capital
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gains of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of our common stock at different times or different prices, such U.S. Holder must determine its adjusted tax basis, holding period, and gain or loss separately with respect to each block of our common stock.
Non-U.S. Holders
For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of shares of common stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.
In general, any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:
•the gain is effectively connected with the conduct of a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax on a net basis at the rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to the branch profits tax at a rate of 30% (or a lower rate under an applicable income tax treaty);
•such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year in which the Merger is consummated, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate under an applicable income tax treaty), net of applicable U.S.-source capital losses recognized by such Non-U.S. Holder, if any; or
•Smartsheet is or has been a “United States real property holding corporation” as such term is defined in Section 897(c) of the Code (“USRPHC”), at any time within the shorter of the five-year period preceding the Merger or such Non-U.S. Holder’s holding period with respect to the applicable shares of common stock (the “Relevant Period”) and, if shares of common stock are regularly traded on an established securities market (within the meaning of Section 897(c)(3) of the Code), such Non-U.S. Holder owns directly or is deemed to own pursuant to attribution rules more than 5% of our common stock at any time during the relevant period, in which case such gain will be subject to U.S. federal income tax at rates generally applicable to U.S. persons (as described in the first bullet point above), except that the branch profits tax will not apply. Although there can be no assurances in this regard, we believe that we are not, and have not been, a USRPHC at any time during the five-year period preceding the Merger.
Non-U.S. Holders are urged to consult their tax advisors as to any applicable tax treaties that might provide for different rules.
Information Reporting and Backup Withholding
Generally, information reporting requirements may apply in connection with payments made to U.S. Holders and Non-U.S. Holders in connection with the Merger.
Backup withholding of tax (currently, at a rate of 24%) is generally expected to apply to the proceeds received by a U.S. Holder pursuant to the Merger, unless the U.S. Holder provides the applicable withholding agent with a properly completed and executed IRS Form W-9 providing such U.S. Holder’s correct taxpayer identification number and certifying that such U.S. Holder is not subject to backup withholding, or otherwise establishes an exemption, and otherwise complies with the backup withholding rules. Backup withholding of tax may also apply to the proceeds received by a Non-U.S. Holder pursuant to the Merger, unless the Non-U.S. Holder provides the applicable withholding agent with a properly completed and executed IRS Form W-8BEN or W-8BEN-E (or other applicable IRS Form W-8), attesting to such Non-U.S. Holder’s status as a non-U.S. person and otherwise complies with applicable certification requirements.
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Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder or Non-U.S. Holder generally will be allowed as a credit against such holder’s U.S. federal income tax liability, if any, and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE RECEIPT OF CASH FOR THEIR SHARES OF OUR COMMON STOCK PURSUANT TO THE MERGER UNDER ANY U.S. FEDERAL, STATE, LOCAL, NON-U.S., OR OTHER TAX LAWS, OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Regulatory Approvals Required for the Merger
The completion of the Merger is subject to, among other conditions described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”:
•The expiration or termination of the waiting periods, if any, applicable to the merger pursuant to the HSR Act; and the absence, expiration, or termination of any agreement with any governmental authority not to consummate the Merger, including any agreement with any governmental authority to stay, toll, or extend any applicable waiting period;
•All consents, approvals and filings required under certain specified foreign antitrust and competition and foreign direct investment laws shall have been obtained or made (including deemed approvals in the event that the relevant authority fails to issue a decision within the required time period specified by applicable law), and all waiting periods (including any extensions thereof and including any timing agreements with applicable governmental authorities) relating to the execution, delivery, and performance of the Merger agreement and the consummation of the Merger shall have expired or otherwise been terminated under any such laws; and
•The absence of (i) any injunction or other order issued by any governmental authority of competent jurisdiction, or (ii) any law applicable to the Merger, that in the case of each of the foregoing clauses (i) or (ii), prohibits or makes illegal the consummation of the Merger.
Smartsheet, Parent, and Merger Sub shall use their reasonable best efforts to (i) promptly file any and all required notification and report forms under the HSR Act, cause the expiration or termination of any applicable waiting periods under the HSR Act as soon as reasonably practicable; (ii) as soon as reasonably practicable make and submit certain specified other filings or notifications required under other applicable antitrust or foreign direct investment laws, and to obtain clearances or approvals or cause the expiration or termination of any applicable waiting periods under such laws as soon as reasonably practicable; (iii) cooperate with each other in promptly undertaking the foregoing reasonable best efforts; (iv) not withdraw any filing, or commit to or agree with any relevant authority to stay, toll, or extend, any applicable waiting period or enter into any similar timing agreement, without the prior written consent of the other parties (not to be unreasonably withheld, conditioned. or delayed); (v) promptly make an appropriate response to any request by a relevant authority for any additional information or documents pursuant to any applicable law; and (vi) resolve, avoid, or eliminate impediments or objections, if any, that may be asserted with respect to the Transactions under any antitrust or foreign direct investment laws, and avoid the entry of any decree, order, or judgment that would prevent, prohibit, restrict, or delay the consummation of the Transactions, so as to enable Closing to take place as soon as reasonably practicable (but in no event later than the End Date), including by defending or resisting any actions, lawsuits, or other legal proceedings challenging or seeking to enjoin or otherwise prevent the Transactions, and by endeavoring to lift, reverse, or vacate any order or injunction preventing Closing.
Although we expect that all required regulatory clearances and approvals will be obtained, we cannot assure you that these regulatory clearances and approvals will be timely obtained, obtained at all, or that the granting of these
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regulatory clearances and approvals will not involve the imposition of additional conditions, restrictions, qualifications, requirements, or limitations on the Transactions, including the requirement to divest assets, license, or hold separate assets or terminate existing relationships and contractual rights, or agree to other remedies, or require changes to the terms of the Merger Agreement. These conditions or changes could result in the conditions to the Merger not being satisfied. Both before and after the expiration of the applicable waiting period, the FTC and the DOJ retain the authority to challenge the Merger on antitrust grounds.
HSR Act and United States Antitrust Matters
Under the HSR Act and the rules promulgated thereunder, the Merger may not be completed until Smartsheet and Parent each file a Notification and Report Form with the Antitrust Division of the DOJ and the FTC (both of which were filed by October 10, 2024), and the applicable waiting period (and any extension thereof) or any commitment by the parties to the Merger Agreement not to consummate the Transactions before a certain date under a timing agreement has, in each case, expired or been terminated. The waiting period under the HSR Act applicable to the Merger is 30 calendar days following the parties’ filings of their respective HSR Act Notification and Report Forms, unless the waiting period is terminated earlier or extended. If the DOJ or the FTC issues a request for additional information and documentary materials (which we refer to as a “Second Request”) prior to the expiration of the initial waiting period, the parties must observe a second 30-day waiting period, which would begin to run only after both parties have substantially complied with such Second Request, unless the waiting period is terminated earlier or the parties agree with the DOJ or FTC to delay the closing for a specified period of time.
Other Regulatory Approvals
The Merger is also subject to clearance or approval under certain foreign direct investment and other antitrust regimes, including in the European Union. The Merger cannot be completed until all applicable waiting periods (and any extensions thereof) applicable to the Merger in the relevant jurisdictions have expired or otherwise been terminated, or all requisite clearances, consents and approvals pursuant thereto have been obtained pursuant to the applicable foreign direct investment or antitrust laws. In addition, Parent, in coordination and consultation with Smartsheet, submitted a draft filing under the European Union merger control regime on October 25, 2024 and has submitted or expects to submit each of the other specified filings seeking Required Foreign Approvals (as defined in the Merger Agreement) in early November 2024.
Other Potential Intervention Pursuant to Regulatory Laws
At any time before or after the Effective Time (notwithstanding the expiration or termination of (i) the waiting period (and extensions thereof) applicable to the Merger under the HSR Act, and (ii) any voluntary agreement not to consummate the Merger between Parent and Smartsheet, on the one hand, and the FTC and DOJ, on the other hand), the DOJ or FTC or any state or foreign government authority could take action under applicable antitrust or foreign direct investment laws as it deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Merger, seeking divestiture of substantial assets of one or both of the parties, requiring the parties to license or hold separate assets or terminate existing relationships and contractual rights, or requiring the parties to agree to other remedies.
In addition, private parties may seek to take legal action under applicable antitrust laws under certain circumstances, including by seeking to intervene in the regulatory process or litigate to enjoin the consummation of the Merger or overturn regulatory approvals.
Any of these potential actions could significantly impede, delay or even preclude the consummation of the Merger. We cannot be certain that a challenge to the Merger will not be made or that, if a challenge is made, we will prevail.
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THE MERGER AGREEMENT
Explanatory Note Regarding the Merger Agreement
The following summary of the Merger Agreement is intended solely to provide investors with information regarding the terms of the Merger Agreement and is not intended to modify or supplement any factual disclosures about Smartsheet in its public reports filed with the SEC. In particular, the Merger Agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the parties or any of their subsidiaries or affiliates. The descriptions of the Merger Agreement in this summary and elsewhere in this proxy statement are not complete and are qualified in their entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We encourage you to read the Merger Agreement carefully and in its entirety because this summary and the other descriptions of the Merger Agreement elsewhere in this proxy statement may not contain all the information about the Merger Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement. Capitalized terms used in this section but not defined in this proxy statement and the phrase “business day” have the meanings ascribed to them in the Merger Agreement.
The representations, warranties, covenants, and agreements described below and included in the Merger Agreement (i) were made only for purposes of the Merger Agreement and as of specific dates; (ii) were made solely for the benefit of the parties to the Merger Agreement; and (iii) may be subject to important qualifications, limitations, and supplemental information agreed to by Smartsheet, Parent, and Merger Sub in connection with negotiating the terms of the Merger Agreement. The representations and warranties may have been included in the Merger Agreement for the purpose of allocating contractual risk among Smartsheet, Parent, and Merger Sub rather than to establish matters as facts and may also be subject to contractual standards of materiality that differ from those generally applicable to reports and documents filed with the SEC or what may be viewed as material by our shareholders and in some cases were qualified by matters specifically disclosed in Smartsheet’s filings with the SEC prior to the date of the Merger Agreement and confidential matters disclosed to Parent and Merger Sub by Smartsheet in connection with the Merger Agreement. Shareholders should not rely on the representations, warranties, covenants, and agreements therein, or any descriptions thereof, as characterizations of the actual state of facts or condition of Smartsheet, Parent, or Merger Sub or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Smartsheet’s public disclosures. In addition, you should not rely on the covenants in the Merger Agreement as actual limitations on the respective businesses of Smartsheet, Parent, and Merger Sub, because the parties may take certain actions that are either expressly permitted in the confidential disclosure letter to the Merger Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The Merger Agreement is described below, and included as Annex A to the proxy statement, only to provide you with information regarding its terms and conditions and not to provide any other factual information regarding Smartsheet, Parent, Merger Sub, or their respective businesses. Accordingly, the representations, warranties, covenants and other agreements in the Merger Agreement should not be read alone, and you should read the information provided elsewhere in this proxy statement and in our filings with the SEC regarding Smartsheet and our business.
The Merger
The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement and the applicable provisions of the WBCA, at the Effective Time, Merger Sub will be merged with and into Smartsheet, the separate corporate existence of Merger Sub will cease and Smartsheet will continue as the surviving corporation of the Merger and as a wholly owned subsidiary of Parent. Unless otherwise mutually agreed in writing between Smartsheet and Parent, the Closing will take place on the date within two business days (unless, if the last condition to Closing to be satisfied under the Merger Agreement is the Smartsheet shareholder approval, four business days) after the date on which the conditions to closing of the Merger (as described in the section of this proxy statement captioned “The Merger Agreement — Conditions to the Merger”) have been satisfied or waived (if such waiver is permissible under the Merger Agreement or under applicable law), other than those conditions that,
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by their terms, are to be satisfied at the closing of the Merger, but subject to the satisfaction or waiver of such conditions at the closing of the Merger. On the date of the Closing, the parties will file a certificate of merger with respect to the Merger in accordance with the WBCA (the “Articles of Merger”) with the Secretary of State of the State of Washington and shall take such further actions as may be required to make the Merger effective. The Merger will become effective at the time and day of the filing of the Articles of the Merger and acceptance by the Secretary of State of the State of Washington, or a later time and day as may be agreed in writing by the parties and specified in the Articles of Merger.
Articles of Incorporation and Bylaws
At the Effective Time, subject to the provisions of the Merger Agreement described in the section of this proxy statement captioned “The Merger Agreement — Indemnification and Insurance” below, (i) the articles of incorporation of Smartsheet will be amended and restated in its entirety to read as set forth in Annex E attached hereto, and (ii) the bylaws of Smartsheet will be amended and restated in its entirety to read as set forth in Annex F attached hereto.
Directors and Officers
From and after the Effective Time, unless otherwise determined by Parent prior to the Effective Time, until their successors are duly appointed and qualified or until their earlier death, resignation, or removal in accordance with the amended and restated articles of incorporation and amended and restated bylaws of Smartsheet, the directors of Merger Sub immediately prior to the Effective Time will be, from and after the Effective Time, the initial directors of the Surviving Corporation, and the officers of Smartsheet immediately prior to the Effective Time will be, from and after the Effective Time, the initial officers of the Surviving Corporation.
Effect on Capital Stock
Upon the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time:
•Each share of Smartsheet common stock that is issued and outstanding immediately prior to the Effective Time (excluding Canceled Shares and any Dissenting Shares (each as defined below)) will be canceled and cease to exist and automatically converted into the right to receive an amount in cash equal to $56.50 per share (the “Merger Consideration”), without interest;
•all shares of Smartsheet common stock owned directly by Parent, Merger Sub, any of their wholly owned subsidiaries, or any subsidiary of Smartsheet (including if held in treasury or otherwise) as of immediately prior to the Effective Time (the “Canceled Shares”), in each case, will be canceled and cease to exist without any conversion thereof and no consideration shall be delivered in exchange therefor; and
• each share of common stock, par value of $0.01 per share, of Merger Sub that is outstanding immediately prior to the Effective Time will be converted into one fully paid and nonassessable share of common stock, par value of $0.01 per share, of the Surviving Corporation.
Shares of Smartsheet common stock held by Smartsheet shareholders who are entitled to demand and have properly and validly demanded their statutory rights of appraisal in respect of these shares in compliance in all respects with Chapter 23B.13 of the WBCA (the “Dissenting Shares”) will not be converted into or represent the right to receive the Merger Consideration, but instead will be entitled to receive an amount as may be determined pursuant to Chapter 23B.13. However, all Dissenting Shares that are held by Smartsheet shareholders who have failed to properly and validly demand or who have effectively withdrawn or otherwise lost their rights to appraisal of these Dissenting Shares under Chapter 23B.13 will no longer be considered to be Dissenting Shares and will be deemed to have been converted into, as of the Effective Time, the right to receive the Merger Consideration, without interest, upon compliance with the applicable procedures set forth in the Merger Agreement with respect to the surrender of certificates representing such shares or the book-entry transfer of shares.
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From and after the Effective Time, all shares of Smartsheet common stock will no longer be outstanding and will automatically cease to exist, and will cease to have any rights with respect thereto, except as specified above.