ClearBridge Investments Sends Letter Urging Board of Directors of Model N, Inc. to Reconsider Proposed Acquisition by Vista Equity Partners

ClearBridge Investments, Inc. has sent a letter to the Chairman of the Board of Model N, Inc. (NYSE: MODN). The purpose of the letter is to urge Model N’s Board of Directors to reconsider its recently announced agreement to be acquired by Vista Equity Partners.

The full text of the letter follows.

Jeffrey Bailin and Aram Green
ClearBridge Investments, LLC
620 8th Avenue, 48th Floor
New York, NY 10018

April 15, 2024

Baljit Dail
Model N, Inc.
777 Mariners Island Boulevard, Suite 300
San Mateo, CA 94404

Dear Mr. Dail and Members of the Model N Board of Directors,

We are writing on behalf of several strategies at ClearBridge Investments, a $188 billion global equity manager, to offer our thoughts on the proposed acquisition of Model N by Vista Equity Partners. We own 6.97% of the outstanding common stock of Model N as of Dec. 31, 2023. We believe the proposed acquisition materially undervalues Model N’s outlook as a public company or value to strategic or financial buyers. With the proposed acquisition contingent on a shareholder vote, we intend to carefully consider whether this appropriately values Model N for our own investors.

About ClearBridge Investments

By way of background, ClearBridge is a global long-only equity asset manager and affiliate of Franklin Templeton. The firm had over $188 billion in assets under management as of March 31, 2024. We co-manage several strategies, and seek to be long-term holders of our companies. Our strategies have below-average turnover and targeted holding periods of three to five years.

Exploring Maximizing Value for Model N Shareholders

We have been long-term shareholders of Model N, having first acquired a holding in September 2020. Originally, we were attracted to Model N’s unique competitive positioning, dominating a niche, high-value market selling to a resilient customer base in life sciences and high tech. We were aware the company had embarked on a cloud/SaaS subscription transition, something we have lived through in other software business models, and saw the potential for long-term upside in revenue dollars, long-term growth, and profitability. Our diligence uncovered that Model N’s product offering had limited competitive alternatives in life sciences revenue management software. With increasing regulatory burden, we anticipated there would be expansion module opportunities over time, a fact echoed by numerous management statements on the company’s cross-sell potential. The company has executed well on the SaaS transition, new logo additions, and geographic/product expansions with existing customers, all while meaningfully increasing margins. With the heavy lifting of the model transition largely finished, the company is well-positioned for accelerating performance in the medium term.