Forge Announces Non-Binding Letter of Intent for the Acquisition of Accuidity Capital Management
Forge Global Holdings, Inc. ("Forge") (NYSE:FRGE), a leading provider of marketplace infrastructure, data services, and technology and investment solutions for the private market, today announced that it has entered into a non-binding term sheet with Accuidity Capital Management ("Accuidity") and its controlling equity holders to acquire 100% of the outstanding equity interests of Accuidity through a merger transaction.
Accuidity is a specialized asset management firm focused on private investing. Its team has deep investment management expertise and believes in bringing access, liquidity, and transparency to market participants through a diverse and innovative set of product offerings, including rules-based, index-tracking products, co-investment vehicles, and early-stage venture funds by utilizing its proprietary data, technology, and sourcing ecosystem. Accuidity manages the Megacorn Fund, the first institutionally managed index fund that seeks to provide exposure to private, late-stage growth companies by seeking to replicate, over time, the performance of the Forge Accuidity Private Market Index. The Megacorn Fund has recently filed an application with the SEC to register as a publicly traded index fund that would allow access by a broader investor set including non-accredited investors.
The non-binding term sheet provides for an initial purchase price of $10.0 million in cash (subject to customary adjustments) and 1.15 million shares of Forge common stock issued at closing in a private placement transaction. Of that, 483,333 shares issued at closing will be subject to employment-related vesting criteria. In addition, the non-binding term sheet provides for potential post-closing earn-out consideration of up to a maximum of 1 million additional shares of Forge common stock that may be payable to Accuidity's equity holders upon the achievement of certain operational and recurring revenue milestones through the end of 2027.
Through the potential combination, Forge and Accuidity will seek to expand Forge's asset management capabilities, with the aim to deliver a comprehensive set of investment products and private wealth solutions to Forge's growing global client base and beyond. If completed, Forge believes the acquisition will be accretive to EPS and transformational to Forge's revenue streams, add new recurring revenue, and increase Forge's confidence in achieving Adjusted EBITDA breakeven in 2026.
The non-binding term sheet provides for an exclusive negotiating period between Forge and Accuidity and is subject to completion of customary due diligence by Forge and the negotiation and entry into a definitive merger agreement between Forge and Accuidity. The definitive agreement is also expected to include customary covenants, closing conditions, including required regulatory approvals, indemnification provisions and termination rights. There can be no assurances that Forge will enter into a definitive agreement or complete the acquisition.
Forward-Looking Statements
This press release contains "forward-looking statements," which generally are accompanied by words such as "believe," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "target," "goal," "expect," "should," "would," "plan," "predict," "project," "forecast," "potential," "seem," "seek," "future," "outlook," and similar expressions that predict, indicate, or relate to future events or trends or Forge's future financial or operating performance, or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the potential acquisition of Accuidity from its existing equity holders, the terms and conditions of any such potential acquisition, whether such acquisition will occur on the terms set forth in the non-binding term sheet, if at all, and the impact of the acquisition on Forge's current and future product offerings, business, and financial results and condition. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, while considered reasonable by Forge and its management, are subject to risks and uncertainties that may cause actual results to differ materially from current expectations, including but not limited to the risks that Forge and Accuidity will not be able to negotiate and enter into a definitive purchase agreement for the Accuidity business on terms set forth in the non-binding term sheet or at all, regulatory and other risks associated with Forge's ability to complete such an acquisition even if a definitive purchase agreement is executed, and, if it occurs, other risks and uncertainties associated with the integration of the Accuidity business and whether Forge will achieve its desired or expected business, operational, and financial outcomes from the acquisition. You should carefully consider the risks and uncertainties described in Forge's documents filed, or to be filed, with the SEC. There may be additional risks that Forge presently does not know of or that it currently believes are immaterial that could also cause actual results to differ materially from those contained in the forward-looking statements. In addition, forward-looking statements reflect Forge's expectations, plans, or forecasts of future events and views as of the date of this press release. Forge anticipates that subsequent events and developments will cause its assessments to change. However, while Forge may elect to update these forward-looking statements at some point in the future, Forge specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Forge's assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Use of Non-GAAP Financial Information
This press release presents Adjusted EBITDA, a financial measure not determined in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Forge uses Adjusted EBITDA to evaluate its ongoing operations and for internal planning and forecasting purposes. Forge believes that Adjusted EBITDA, when taken together with the corresponding GAAP financial measure, provides meaningful supplemental information regarding Forge's performance by excluding specific financial items that have less bearing on its core operating performance. Forge considers Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in Forge's business and its historical operating performance on a more consistent basis.
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in Forge's industry, may calculate similarly titled non-GAAP financial measures differently, or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. A reconciliation for Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP, for historical periods can be found in Forge's most recent quarterly earnings release set forth in the investor relations section of Forge's website at https://ir.forgeglobal.com. Investors are encouraged to review Adjusted EBITDA and the reconciliation of Adjusted EBITDA to net loss, and not to rely on any single financial measure to evaluate Forge's business. Forge has not provided a reconciliation for forward-looking non-GAAP financial measures because, without unreasonable efforts, it is unable to predict with reasonable certainty the amount and timing of adjustments that are used to calculate this non-GAAP financial measure, particularly related to stock-based compensation and related tax effects.
Forge defines Adjusted EBITDA as net loss, adjusted to exclude: (i) interest expense, net, (ii) provision for or benefit from income taxes, (iii) depreciation and amortization, (iv) share-based compensation expense, (v) change in fair value of warrant liabilities, (vi) acquisition-related transaction costs, and (vii) other significant gains, losses, and expenses (such as impairments, transaction bonus) that Forge believes is not indicative of its ongoing results.
About Forge
Forge (NYSE:FRGE) is a leading provider of marketplace infrastructure, data services and technology and investment solutions for the private market. Forge Securities LLC is a registered broker-dealer and a member of FINRA that operates an alternative trading system.
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