SkillSoft has decided to divest SumTotal, which it bought in 2014.
Cornerstone has moved to buy the L&D startup for $200 million.
Here's the inside track of the deal.
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From hire to retire, HR software is essential for successful employee management and development.
Back in 2014, learning and development (L&D) management company SkillSoft acquired SumTotal. At the time, the deal was called “a corporate training market disruption” by Forbes because of its contribution to virtual learning and talent development offerings.
Fast forward to 2022, Cornerstone is buying SumTotal off Skillsoft for $200 million. Cornerstone is taking on SumTotal as SkillSoft seeks to simplify its own portfolio.
For Cornerstone, this is an opportunity to “underscore the fundamental growth thesis [they] see for Cornerstone, as a leading talent management SaaS platform provider,” said Prasgant Metrotra, partner at Clearlake, the capital group that owns Cornerstone.
This acquisition is expected to close in the second half of 2022.
Centerview Partners LLC is serving as financial advisor to Cornerstone and Clearlake, and Sidley Austin LLP is acting as legal counsel. PJT Partners will serve as the financial advisor to Skillsoft, and Weil, while Gotshal & Manges LLP serves as legal counsel.
The Future of SumTotal and Cornerstone
SumTotal boasts an impressive lineup of clients, including the likes of Edward Jones, Universal Parks and Resorts, and the University of California.
According to SkillSoft representatives, SumTotal generated around $123 million in bookings and $120 million in revenue in the fiscal year 2022.
Clearlake Managing Director Paul Huber noted that the acquisition of SumTotal will allow “Cornerstone to deliver more value to customers and employees alike,” and “drive accelerated growth and value for the business”.
The SumTotal’s hold within vertical markets will merge well with Cornerstone’s current portfolio.
What does this mean for SkillSoft?
SkillSoft’s sale of SumTotal will allow the company to focus on its other projects and investments. According to SkillSoft, the company will use part of the proceeds from the sale to partially repay its senior-secured term loan B facility.
This facility will be used to “to finance a portion of the cash consideration of Skillsoft’s pending acquisition of Codecademy, a leading online learning platform for technical skills”.
Codeacademy focuses on training in coding and computer skills, in contrast with SkillSoft’s more corporate training platform.
Because SkillSoft has developed Percipio, its own learning platform, selling SumTotal gives it the chance to further develop and grow the platform.
Ultimately, this acquisition demonstrates the value of HR software systems, as Clearlake, Cornerstone and SkillSoft are seeking to amplify their reach in the field through this sale.
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