Jacobs leading takeover of software company as he readies next move
Brad Jacobs has chosen the vessel for his next act.
The man who put together the XPO freight conglomerate and then sold it off in pieces to leave behind the LTL-focused XPO, stand-alone 3PL RXO and contract logistics company GXO is leading a $1 billion investment in a company called SilverSun Technologies, which is publicly traded on the Nasdaq (NASDAQ: SSNT). Jacobs remains executive chairman of XPO (NYSE: XPO) and nonexecutive chairman of GXO (NYSE: GXO) and RXO (NYSE: RXO).
Jacobs is making the investment through his investment vehicle, Jacobs Private Equity (JPE). According to an announcement released Monday, JPE will invest $900 million in SilverSun and a group of other investors, which includes private equity firm Sequoia Heritage, will invest the other $100 million.
The $1 billion investment is for a software company with a market capitalization that isn’t even $20 million and its existing business will be spun off into a stand-alone operation. What remains will be a publicly traded company that, as JPE said in a news release, “will become a standalone platform for significant acquisitions in an industry to be announced soon, along with the Company’s new name.”
The spinoff is expected to be completed in two to four months.
Jacobs, in earlier statements about his next move, did say he intended to be involved in a publicly traded company as he prefers public markets to private capital.
The acquisition of SilverSun appears to have strong parallels to how Jacobs got XPO rolling in 2011. He acquired Express-1 Expedited Solutions with a $150 million investment and built that into XPO. One key difference is the activities Jacobs acquired with Express-1 were in the industry that he stayed in through XPO. What SilverSun does is not relevant to his plans.
SilverSun says on its website that it “is involved in the acquisition and build-out of technology and software companies engaged in providing best of breed management applications and professional consulting services to small and medium size businesses (SMBs) in the manufacturing, distribution and service industries.”
In its prepared statement, JPE spells out a series of steps that will result in JPE and its minority investors ultimately owning approximately 99.85% of the company. The existing shareholders of SilverSun will receive a $2.5 million cash dividend, funded by the JPE deal, and the existing operations will be spun off into a company named SilverSun Technologies Holdings. The current management at SilverSun will stay in place at the new company, its core business will continue and the deal is structured so its shareholders are in position to benefit from growth at JPE.
After the spinoff is completed, Jacobs will become CEO and chairman of the remaining company, which at that point will have no ongoing activities. And with a platform in hand, Jacobs’ next round of investments and activities can commence with the backing of a publicly traded company.
Jacobs is scheduled to address the Economic Club of New York on Dec. 11 in a midday fireside chat. There have been suggestions he will provide more details of his plans at that time.
Besides logistics, he has created other companies in equipment leasing (United Rentals), waste management (United Waste Systems) and energy brokerage (Amerex).
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