XML 18 R7.htm IDEA: XBRL DOCUMENT v3.23.3
Nature of Business and Basis of Presentation
9 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Business and Basis of Presentation

1. Nature of Business and Basis of Presentation

EngageSmart, Inc. and its subsidiaries (together referred to herein as the “Company” or “EngageSmart”) is a leading provider of vertically tailored customer engagement software and integrated payments solutions. EngageSmart offers single instance, multi-tenant, true Software-as-a-Service (“SaaS”) vertical solutions, including SimplePractice, InvoiceCloud, and DonorDrive, that are designed to simplify the Company's customers' engagement with its clients by driving digital adoption and self-service. On August 2, 2023, the Company divested the entity that operated the HealthPay24 solution, which was previously included in the Company's Enterprise Solutions segment. The Company serves customers across several core verticals: Health & Wellness, Government, Utilities, Financial Services, and Giving. EngageSmart's solutions are purpose-built for each of the Company's verticals and they simplify and automate mission-critical workflows such as scheduling, client onboarding, client communication, paperless billing, and electronic payment processing. EngageSmart is headquartered in Braintree, Massachusetts with additional locations throughout the United States.

On October 23, 2023, EngageSmart entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Icefall Parent, LLC, a Delaware limited liability company and affiliate of Vista Equity Partners (“Parent”), and Icefall Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”, and together with Parent, the “Buyer Parties”), providing for the merger of Merger Sub with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). Refer to Note 16 - Subsequent Events, for further information.

Secondary Offering

On February 28, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein, and certain of the Company’s stockholders, including affiliates of General Atlantic, L.P ("General Atlantic") and Summit Partners and certain members of the Company’s management (collectively the “Selling Stockholders”), relating to an underwritten public offering (the “Secondary Offering”) of 8,000,000 shares of the Company’s common stock at a price to the public of $19.00 per share, with an option exercisable by the underwriters for 30 days to purchase up to an additional 1,200,000 shares of common stock from certain of the Selling Stockholders at the public offering price, less underwriting discounts and commissions.

In March 2023, pursuant to the Underwriting Agreement, the Selling Stockholders sold an aggregate of 9,200,000 shares of common stock in the Secondary Offering. The Company did not receive any of the proceeds from the sale of common stock, with all proceeds going to the Selling Stockholders.

In connection with the Secondary Offering, the Company incurred costs of $1.6 million during the nine months ended September 30, 2023, which are included within general and administrative expenses on the condensed consolidated statement of operations and comprehensive income.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation. For all the periods reported in these condensed consolidated financial statements, the Company has not and does not have any material revenue-generating operations on a standalone basis, and all the material revenue-generating operations of the Company are conducted by its subsidiaries.

Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, included in the Company's 2022 Form 10-K. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position for the periods presented. The results for the interim periods presented are not necessarily indicative of future results.