Ultimate Software gets OK to proceed with sale

Ultimate Software is one step closer to a deal that could make millionaires out of some longterm employees who are stockholders.

The company got the green light from federal regulators to proceed with a merger that will result in an $11 billion sale of the company to private investors.

Ultimate announced Feb. 4 that it had agreed to merge with United Parent Corp., a new entity created for private investors to acquire the company. On Wednesday, Ultimate was among the proposed mergers given “early termination notice” by the government.

Early termination notices are granted after compliance with antitrust rules, and if both the FTC and Department of Justice have completed their reviews and determined they will not take any enforcement action.

Mitch Dauerman, Ultimate Software’s investor relations director and former chief financial officer, said the company didn’t have any comment on the federal clearance. While the board has agreed to the sale, Ultimate shareholders still have to vote, and that date has not yet been set, he said.

The government’s antitrust divisions have taken a closer look or even contested some mergers in South Florida, with the StaplesOffice Depot proposed merger being most notable. That proposed merger was abandoned by the companies in 2016, after a court fight with the FTC.

The software company, which specializes in software for payroll and workforce management, employs more than 5,100 employees including 1,650 in Weston. Employees are given restricted stock upon hire and as incentives for performance, and that stock turns to cash when the sale is final.

Stockholders are slated to receive $331.50 in cash for each share of Ultimate’s common stock held upon the closing of the transaction, which is expected in mid-2019.

In a securities filing Feb. 20, an excerpt from an employee presentation made by Ultimate’s Chief Technology Officer Adam Rogers gives a glimpse at why the company’s leadership decided to take Ultimate private.

Using a hypothetical growing company as an example, Rogers said: “If you're not growing at a certain rate, then Wall Street says, well, then you better be making a whole lot of money. …Now every single dollar that I want to go spend, I have to figure out, I’ve got to make a decision. Do I want to spend money on R&D, sales and marketing? Or do I do what Wall Street asked me to do, which is to make more money?”

The ideal situation, Rogers says in his talk, is to “find somebody who really believes in your culture, believes in your business and believes in you as a team, so that you can keep running your company, just run it privately.”

Rogers told colleagues he won’t miss the pressure of Wall Street earnings calls and “quarterly check-ins” required by a public company.

“It is 12 short weeks and they want to know what happened,” he said.