GREENWICH, Conn. and EAST HANOVER, N.J. — December 4, 2023 — SilverSun Technologies, Inc. (Nasdaq: SSNT) (“SilverSun” or the “Company”) and Jacobs Private Equity II, LLC (“JPE”), which is led by Brad Jacobs, today announced that they and minority co-investors have entered into an investment agreement (the “Investment Agreement”), pursuant to which JPE and the minority co-investors will invest $1 billion in cash into SilverSun. The proposed equity investment is comprised of $900 million by JPE and $100 million by co-investors, including Sequoia Heritage.
Upon the closing of the equity investment, JPE will become the majority stockholder of SilverSun and Jacobs will become the Company’s chief executive officer and chairman of its board of directors. The Investment Agreement also provides for the spin-off of the Company’s existing business to SilverSun stockholders as of a record date that is expected to be one day prior to the closing of the investment. The remaining Company will become a standalone platform for significant acquisitions in an industry to be announced soon, along with the Company’s new name.
Jacobs said, “I’m excited to start building another multibillion-dollar company from scratch. Soon, I’ll be providing more information about my new venture and industry, and the strategy we plan to execute.”
Jacobs has completed approximately 500 M&A transactions in his career, and built five multi-billion dollar, publicly traded companies to date: XPO, Inc., one of the largest providers of less-than-truckload services in North America; GXO Logistics, Inc., the largest pure-play contract logistics provider in the world; RXO, Inc., a leading tech-enabled freight brokerage platform; United Rentals, Inc., the world’s largest equipment rental company; and United Waste Systems, Inc., the fifth largest U.S. waste management company at the time of its sale.
Each of these companies has a history of attracting world-class talent, establishing advantages through technology, and scaling up through accretive capital allocations for M&A and organic growth.
The Investment Agreement
Under the terms of the Investment Agreement, the Company will, shortly after the closing of the investment, separate (“spin off”) the existing SilverSun business as SilverSun Technologies Holdings, Inc. (the “spin-off company”) and distribute all shares of the spin-off company to the stockholders of SilverSun as of a record date that is expected to be one day prior to the closing of the equity investment. The Company will also effect an 8:1 reverse stock split prior to the closing of the equity investment. Upon the closing of the investment and the effectiveness of the reverse stock split, JPE, Sequoia Heritage and the other co-investors will have: (i) voting, convertible preferred stock that, in aggregate, is convertible into approximately 219 million shares of the Company’s common stock at a price of $4.57 per share (equivalent to $0.57 per share pre-split); and (ii) warrants to purchase an additional approximately 219 million shares of the Company’s common stock at post-reverse-split exercise prices of: $4.57 per share (equivalent to $0.57 per share pre-split) with respect to 50% of the warrants, $6.85 per share (equivalent to $0.86 per share pre-split) with respect to 25% of the warrants, and $13.70 per share (equivalent to $1.71 per share pre-split) with respect to the remaining 25% of the warrants. Following the closing of the investment, JPE and the co-investors will own approximately 99.85% of the Company’s common stock on a fully convertible/exchangeable basis.
In addition, SilverSun will declare a $2.5 million aggregate cash dividend to its stockholders as of the same record date, to be funded from proceeds received under the Investment Agreement. The transactions contemplated by the Investment Agreement have been approved by SilverSun’s board of directors, and are expected to be completed in 2024. The transactions are subject to SilverSun stockholder approval and the satisfaction of other customary closing conditions.
The Company’s current management and board of directors, including Mark Meller, SilverSun’s chief executive officer, are expected to continue in their current roles at the spin-off company and its subsidiaries. The spin-off company will apply for a public listing of its shares, which will be registered pursuant to a Form 10 registration statement that will be filed with the U.S. Securities and Exchange Commission.
Meller said, “We believe this investment agreement will provide ideal outcomes for our stockholders, customers and employees, including the opportunity for our stockholders to realize a substantial upfront cash payment in the form of a $2.5 million dividend. We expect our stakeholders will benefit from retaining the value of our existing business, while also participating in the potential upside of Brad Jacobs’ future business plans for the company.”
Goldman Sachs and Morgan Stanley are serving as financial advisors to JPE, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor.
The Benchmark Company, LLC is serving as financial advisor to SilverSun, and Lucosky Brookman LLP is serving as legal advisor.
Cautionary statement regarding forward-looking statements
This press release contains forward-looking statements. Statements that are not historical facts, including statements about beliefs or expectations, are forward-looking statements. These statements are based on plans, estimates, expectations and projections at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “opportunity,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal,” or “continue,” or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. Factors that could cause actual results to differ materially from those described in this press release include, among others:
Forward-looking statements included in this press release speak only as of the date each statement is made. Neither the Company nor any person undertakes any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.
Additional information and where to find it
In connection with the proposed equity investment, the Company will prepare a proxy statement to be filed with the U.S. Securities and Exchange Commission (the “SEC”). When completed, a definitive proxy statement and a form of proxy will be mailed to the stockholders of the Company. THE COMPANY’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTIONS BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. The Company’s stockholders will be able to obtain, without charge, a copy of the proxy statement (when available) and other relevant documents filed with the SEC from the SEC’s website at http://www.sec.gov. The Company’s stockholders will also be able to obtain, without charge, a copy of the proxy statement (when available) and other relevant documents from the Company’s website at https://www.silversuntech.com or by written request to the Company at 120 Eagle Rock Avenue, East Hanover, New Jersey 07936.
Participants in the solicitation
Jacobs Private Equity II, LLC and the Company and its directors and officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders with respect to the proposed equity investment and the other transactions contemplated by the Investment Agreement. Information about the Company’s directors and executive officers and their ownership of the Company’s common stock is set forth in the proxy statement for the Company’s 2023 Annual Meeting of Stockholders, which was filed with the SEC on November 27, 2023. The interests of the Company and its directors and executive officers with regard to the proposed equity investment may differ from the interests of the Company’s stockholders generally, and stockholders may obtain additional information by reading the proxy statement and other relevant documents regarding the proposed equity investment and the other transactions contemplated by the Investment Agreement, when filed with the SEC.