Stock Offering Closed
Patriot Software Company successfully closed its Friends & Family stock offering, culminating in a total capital raise of over $15 million since 2017. The Regulation D stock offering was permanently closed with the SEC effective as of January 31, 2019. Common stock was sold at $16.81/share which was based on the November 2017 valuation of $128 million. Patriot Software Company will no longer sell stock at that valuation.
New Valuation and Share Price
The independent valuation experts at Bober, Markey, Fedorovich (BMF) in Cleveland, Ohio issued a new corporate valuation on February 5, 2019 based on FYE 2018 data. According to Patriot’s CEO Mike Kappel, “BMF’s team valued Patriot Software Company at ~$242 million if we had a 100% sale of all of our shares to an outside buyer—which we do not anticipate at this time.” Therefore, the experts applied mathematical discounts to find the value of a non-controlling interest in the company. Kappel said, “The 12/31/2018 valuation is $205.4 million which will set the floor price for the sale of Patriot Software Company stock.”
“The Board of Directors approved the new Patriot Software Company stock price at $28.02 per share,” said Mike Wheeler, Board President and Chief Legal Officer. “The new valuation is based on corporate fiscal year-end data as of December 31, 2018,” he said. The funds will be used primarily to increase national marketing and advertising as well as to continue Payroll and Accounting software development and feature releases.
Stock sold by Patriot Software Company includes its subsidiaries Patriot Software, LLC and Top Echelon, LLC. Up until 2018, Patriot Software enjoyed a steady stream of internal funding from Top Echelon which averages ~$3 million in annual EBITDA. Both subsidiary companies now operate 100% separately. That initial self-funding allowed us to preserve equity in the holding company while developing Patriot Software.
Patriot Software, LLC is rapidly growing in the Accounting & Payroll SaaS markets. Patriot has invested over 300 man years into refining its SaaS products and accurately calculates federal, state, and local payroll taxes in thousands of jurisdictions in all 50 states. Patriot Software now services ~21,500 American small business customers, maintains extremely high customer ratings, and is scaling quickly in the U.S. market.
Top Echelon, LLC’s service offerings are designed exclusively for executive recruiters. Big Biller, its applicant tracking software SaaS, is used by over 5,000 recruiters to electronically collect and store applicant and job-related data. Top Echelon’s Recruiter Network is SaaS software used by 1,200 executive recruiters from 495 member agencies to make split placements with each other. The Network has helped recruiters make ~19,000 split placements since its inception in 1988.
Top Echelon also offers Employer-of-Record services within the recruiting industry. Top Echelon’s Contract Staffing is a full-service back office provider that has helped executive recruiters place over 17,000 W-2 employees in 49 states since 1992.
Contact: Patriot Software, LLC