UserTesting (USER) Unfair M&A Case

On January 10, 2023, UserTesting held a special meeting of its shareholders in connection with the Acquisition by Thoma Bravo, a leading software investment firm, and Sunstone Partners for $7.50 per share, in an all-cash transaction valued at approximately $1.3 billion.

USER Investors suspect that Proxy Statement omitted material information with respect to the Proposed Transaction, which rendered the Proxy Statement false and misleading. Specifically, the Proxy contained the following materially false and/or misleading statements:

• that the Board “believed that the $7.50 per share in cash payable in the [Acquisition] was more favorable to [UserTesting] stockholders on a risk-adjusted basis than the potential value that might result from other alternatives reasonably available";

• the present value per share of UserTesting common stock calculated by Morgan Stanley, UserTesting’s financial advisor, using the unreasonably low October Financial Forecast under a Public Trading Comparables Analysis, namely “an estimated value per share of UserTesting common stock of $3.80 to $6.46”;

• the present value per share of UserTesting common stock calculated by Morgan Stanley using the unreasonably low October Financial Forecast under a Discounted Equity Value Analysis, namely “$4.08 – 7.51”;

• the present value per share of UserTesting common stock calculated by Morgan Stanley using the unreasonably low October Financial Forecast under a Precedent Transactions Multiples Analysis, namely “$6.92 – 10.77”;

• the present value per share of UserTesting common stock calculated by Morgan Stanley using the unreasonably low October Financial Forecast under a Discounted Cash Flow Analysis, namely “$3.59 to $5.17”.

Considering all facts, Investors may suspect that UserTesting misled shareholders to vote to support the Acquisition in reliance on the Proxy Misrepresentations.