UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A
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 EXPLANATORY NOTE

Instructure, Inc. (the “Company”) is filing the investor presentation attached to this Schedule 14A with the Securities and Exchange Commission in
connection with the solicitation of proxies for the Company’s special meeting of the holders of its common stock to be held on February 13, 2020 (the
“Special Meeting”). From time to time prior to the Special Meeting, the Company may use the attached investor presentation or portions thereof in
connection with the solicitation of proxies from the Company’s shareholders.
Investor Presentation January 2020Investor Presentation January 2020
All-cash3was
include
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obtainedstandalone
2 $55 $50 Thoma Bravo deal price: $47.60 $45 Transaction Process Becomes announced $40 Public Activist $35 Agitation and 2/19: 4/29: 7/29: Accumulation Q4 earnings – (5%) Q1 earnings – (8%) Q2 earnings – (1%) $30 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Stage 1: Stage 2: Stage 3: Post-signing Initial inbound discussions Focused strategic review go-shop Explore sale Board oversaw initial discussions with financial sponsors Strategic Actions Committee conducted a Engaged with 24 transaction review of the company strategy and options parties, no new Transaction Committee proposals oversaw a robust and exhaustive process Permission to use quotations neither sought nor obtained 2A year long, conflict-free process with 55 parties Thoughtful, Comprehensive Strategic Process “We have read lots of interesting merger background • Led by directors with significant deal experience materials... We have never seen such an exhaustive list • Board engaged with any parties interested in a transaction of financial sponsors and potential strategic acquirers • Engaged with 55 parties (29 financials, 26 strategics) involved in an M&A scenario.” • 23 NDAs (including 2 with go-shop parties), 4 preliminary proposals in stage 3 – SunTrust Robinson Humphrey, December 26, 2019• Share price affected during process by activists and press rumors • Board approved highest offer as superior to all options including
4th highest revenue multiple paid for a public SaaS company by a private equity acquiror Transaction enterprise value (EV)-to-next twelve months (NTM) revenue multiple 8.6x 7.9x 7.0x 6.8x 6.7x 6.6x 6.2x 6.0x 5.9x Median (excluding Instructure): 5.3x 4.6x 4.6x 4.5x 3.9x 3.4x 2.2x 1.7x Source: Company filings, press releases, Wall Street research Note: Transactions include acquisitions of public Software-as-a-Service companies by a private equity acquiror with greater than $250 million transaction value in the last five years 3 CommerceHub Ultimate Software Apptio Instructure (EDU Only) @ $47.60 MINDBODY Ellie Mae Instructure (WholeCo) @ $47.60 Cvent Marketo Amber road Diligent Xactly Athenahealth LogMeIn Bazaarvoice Jive Software4th highest revenue multiple paid for a public SaaS company by a private equity acquiror Transaction enterprise value (EV)-to-next twelve months (NTM) revenue multiple 8.6x 7.9x 7.0x 6.8x 6.7x 6.6x 6.2x 6.0x 5.9x Median (excluding Instructure): 5.3x 4.6x 4.6x 4.5x 3.9x 3.4x 2.2x 1.7x Source: Company filings, press releases, Wall Street research Note: Transactions include acquisitions of public Software-as-a-Service companies by a private equity acquiror with greater than $250 million transaction value in the last five years 3 CommerceHub Ultimate Software Apptio Instructure (EDU Only) @ $47.60 MINDBODY Ellie Mae Instructure (WholeCo) @ $47.60 Cvent Marketo Amber road Diligent Xactly Athenahealth LogMeIn Bazaarvoice Jive Software
Significant
Partners discloses
premiumstake
to stock
5% 5%price
7/29:
prior
Q2toearnings
speculation
release
driven
10/31:
by Sachem
activists Head
and market
stake disclosed
rumors In12/4:
thousands
Announced
(k) $55sale
5,000
to Thoma
Significant,
Bravospeculative
for $47.601per
J $53
share
increase
C G Kin(1%)
volume
5% 4,500
9/24: Low
$51 4,000
point achieved
I Thoma Bravo
once Q1/Q2
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earnings
$47.60
absorbed
K $4911/6/:
3,500 Praesidium
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pushes
AH sale
$45publicly
2,500 28%
D H premium
by market$43
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Source:
F $41
Company
E 1,500
filings,
C $39Wall
1,000
Street
D $37research,
500 $35FactSet
0 Apr-19
as of
May-19
1/6/2020
Jun-19
1 ~1.5x
Jul-19
increase
Aug-19in Sep-19
volume;Oct-19
calculated
Nov-19
as 513k
Dec-19
(ADTV
One day
between
stock9/24/2019
price change
– 12/4/2019)
(%) 4/15: Praesidium
/ 352k (90-day
filesADTV
13D 10/16:
prior to
Praesidium
the first documented
presents view
purchase
on Instructure
by Praesidium
at Sohnon
11/13:
2/21/2019
Bloomberg
per 13D
reports
filingrumors
on 4/15/2019)
of potential
4 sale A E I 4% Conference 3% 3% 4/29: Q1 earnings release 10/28: Q3 earnings release; guidance reduced; strategic 11/14: Strategic alternatives review announced publicly and B F J (8%) alternatives announced for Bridge Jana Partners discloses stake 5% 5% 7/29: Q2 earnings release 10/31: Sachem Head stake disclosed 12/4: Announced sale to Thoma Bravo for $47.60 per share C G K (1%) 5% 9/24: Low point achieved once Q1/Q2 earnings absorbed 11/6/: Praesidium pushes sale publicly D H by market 3% Source: Company filings, Wall Street research, FactSet as of 1/6/2020 1 ~1.5x increase in volume; calculated as 513k (ADTV between 9/24/2019 – 12/4/2019) / 352k (90-day ADTV prior to the first documented purchase by Praesidium on 2/21/2019 per 13D filing on 4/15/2019) 4Significant premium to stock price prior to speculation driven by activists and market rumors In thousands (k) $55 5,000 Significant, speculative 1 J $53 increase in volume 4,500 $51 4,000 I Thoma Bravo deal price: $47.60 K $49 3,500 B G $47 3,000 A H $45 2,500 28% premium $43 2,000 F $41 E 1,500 C $39 1,000 D $37 500 $35 0 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 One day stock price change (%) 4/15: Praesidium files 13D 10/16: Praesidium presents view on Instructure at Sohn 11/13: Bloomberg reports rumors of potential sale A E I 4% Conference 3% 3% 4/29: Q1 earnings release 10/28: Q3 earnings release; guidance reduced; strategic 11/14: Strategic alternatives review announced publicly and B F J (8%) alternatives announced for Bridge Jana
Transaction delivers material premiums to undisturbed stock prices Thoma Bravo deal price: $47.60 Premium: Premium: Premium: 28% 12% 18% $42.44 $40.47 $37.23 1 Low point achieved once Q1/Q2 earnings Closing price prior to unaffected price 3-month VWAP prior to unaffected price absorbed by market 1 Closing price on 10/28/19 prior to announcing Q3 earnings and the Bridge strategic review after market close 5Transaction delivers material premiums to undisturbed stock prices Thoma Bravo deal price: $47.60 Premium: Premium: Premium: 28% 12% 18% $42.44 $40.47 $37.23 1 Low point achieved once Q1/Q2 earnings Closing price prior to unaffected price 3-month VWAP prior to unaffected price absorbed by market 1 Closing price on 10/28/19 prior to announcing Q3 earnings and the Bridge strategic review after market close 5
SlowingManagement
filings, growth constrains
Projections
standalone
Note:intrinsic
Please refer
valuetodespite
the Company's
forecast proxy
EBITDAstatements
improvement
on fileThoma
with the
Bravo
SEC deal
for more
price:information
$47.60 KeyonObservations
financial projections
Premium:and
Premium:
risks considered
● Rapid deceleration
by the Company's
of growth
Board
from
of Directors
2017 to 2019
1 Denotes
with no
organic
recovery
growth
in out
2 Value
years A
of27%
$37.50
12%represents
● EBITDA the midpoint
margins relatively
of the DCFflatvalue
2019-2020
range of
B $30.50
● EBITDA
to $44.50
marginforexpansion
the 35% forecast
Long-Termin out
EBITDA
years speculative
Margin CaseC $394
3 Value
$358
of $320
$42.50
$279
represents
$238 $195
the midpoint
$42.50 $154
of the
$37.50
DCF value
($mm)range
2017A
of $34.25
2018A 2019E
to $50.75
2020E
for the
2021E
40%2022E
Long-Term
2023EEBITDA
1 Revenue
Margin
growth
Case
40%
4 Adjusted
27% 16%EBITDA
17% 15%
is a12%
non-GAAP
10% A financial
4 Adjustedmeasure
EBITDA and19
is 19
earnings
62 81before
106 Midpoint
interest,of
tax,
DCF
depreciation
Midpoint and
of DCF
amortization
(35% LTandEBITDA
excludes
margin
stock-based
case) (40%
compensation
LT EBITDA expense
margin
6 case) % margin 8% 7% 19% 23% 27% B C Source: Company filings, Management Projections Note: Please refer to the Company's proxy statements on file with the SEC for more information on financial projections and risks considered by the Company's Board of Directors 1 Denotes organic growth 2 Value of $37.50 represents the midpoint of the DCF value range of $30.50 to $44.50 for the 35% Long-Term EBITDA Margin Case 3 Value of $42.50 represents the midpoint of the DCF value range of $34.25 to $50.75 for the 40% Long-Term EBITDA Margin Case 4 Adjusted EBITDA is a non-GAAP financial measure and is earnings before interest, tax, depreciation and amortization and excludes stock-based compensation expense 6Slowing growth constrains standalone intrinsic value despite forecast EBITDA improvement Thoma Bravo deal price: $47.60 Key Observations Premium: Premium: ● Rapid deceleration of growth from 2017 to 2019 with no recovery in out years A 27% 12% ● EBITDA margins relatively flat 2019-2020 B ● EBITDA margin expansion forecast in out years speculative C $394 $358 $320 $279 $238 $195 $42.50 $154 $37.50 ($mm) 2017A 2018A 2019E 2020E 2021E 2022E 2023E 1 Revenue growth 40% 27% 16% 17% 15% 12% 10% A 4 Adjusted EBITDA 19 19 62 81 106 Midpoint of DCF Midpoint of DCF (35% LT EBITDA margin case) (40% LT EBITDA margin case) % margin 8% 7% 19% 23% 27% B C Source: Company
Analyst response validates comprehensiveness of process and fairness of offer price “We have read lots of interesting merger background materials as part of proxy reviews related to M&A transactions. We have never seen such an exhaustive list of financial sponsors and potential strategic acquirers involved in an M&A scenario. Instructure reported to have engaged with 40 parties during the strategic transaction process.” SunTrust 12/26/2019 “We view the proxy as further evidence that a number of potential suitors have looked at INST, and we see the $47.60 as a fair offer.” Raymond James, 12/23/2019 “We believe the deal price is more aligned with our own view of the asset’s value given a small and price-commoditized core market.” Macquarie 12/4/2019 “In our view, Bridge is significantly less mature than Instructure’s educational offering, which results in minimal synergies across its product portfolio. As such, we believe this transaction makes sense” Berenberg 12/4/2019 Source: Wall Street Research Permission to use quotations neither sought nor obtained 7Analyst response validates comprehensiveness of process and fairness of offer price “We have read lots of interesting merger background materials as part of proxy reviews related to M&A transactions. We have never seen such an exhaustive list of financial sponsors and potential strategic acquirers involved in an M&A scenario. Instructure reported to have engaged with 40 parties during the strategic transaction process.” SunTrust 12/26/2019 “We view the proxy as further evidence that a number of potential suitors have looked at INST, and we see the $47.60 as a fair offer.” Raymond James, 12/23/2019 “We believe the deal price is more aligned with our own view of the asset’s value given a small and price-commoditized core market.” Macquarie 12/4/2019 “In our view, Bridge is significantly less mature than Instructure’s educational offering, which results in minimal synergies across its product portfolio. As such, we believe this transaction makes sense” Berenberg 12/4/2019 Source: Wall Street Research Permission to use quotations neither sought nor obtained 7
Analysts’
Canvas hasestimates
“First-quarter
recognize
results
Instructure’s
were relatively
challenging
in line,operating
but did little
environment
to convince
Consensus
us that likely
Estimates
slowed
Keymore
Observations
than consensus
Revenue
would
growth
imply,
Operating
a dynamic
margin
that we
2020E
don't2021E
Bridge2020E
over the
2021E
longer
• Reduced
term is the
growth
right and
bet for
profitability
Instructure
expectations
to be making,
highlight
think is1 fully
In Janappreciated
2019 23.6% by20.1%
the street.”
(3.9%)and0.5%
we have
challenges
been somewhat
facing thesurprised
business •byMedian
the pace
EV/CY20E
of deceleration
sales multiples
in the Canvas
for sub
business.”
20% software
Brian Peterson,
In Dec 2019
Raymond
17.7%James
15.5%10/29/2019
(5.2%) (1.2%)
Justingrowers
Furby, William
are 5.4x Blair
(SunTrust,
4/30/2019
2/14/2020)
“We believe
(590)bps
there
(460)bps
is a heightened
(130)bpslevel
(170)bps
of uncertainty
Canvas Bridge
for Instructure
“We suspect
heading
that the
“Bridge
futurepenetration
standaloneof
growth
the enterprise
profile for
market
Canvas
is more
has “First-quarter
costly and into
results
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as therelatively
Canvas market
in line,appears
but did to
little
be mature.”
to convince
competitive
us that likely
thanslowed
expected,
moreleading
than consensus
to lower growth
would imply,
and profitability.”
a dynamic thatRyan
weMacDonald,
don't BridgeNeedham
over the longer
Brian Essex,
term isMorgan
the rightStanley
bet for 10/29/2019
Instructure to
4/30/2019
be making,
Source:
think Wall
is fully
Street
appreciated
Research,
by FactSet
the street.”
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we have
Streetbeen
estimates
somewhat
include
surprised
both Education
by the pace
andofCorporate
deceleration
businesses
in the Canvas
Permission
business.”
to useBrian
quotations
Peterson,
neither
Raymond
sought James
nor obtained
10/29/2019
1 Revenue
Justin estimates
Furby, William
in 2021E
Blair
provided
4/30/2019
after“We
Q4’19
believe
earnings
there8is a heightened level of uncertainty for Instructure heading “Bridge penetration of the enterprise market is more costly and into 2020 as the Canvas market appears to be mature.” competitive than expected, leading to lower growth and profitability.” Ryan MacDonald, Needham Brian Essex, Morgan Stanley 10/29/2019 4/30/2019 Source: Wall Street Research, FactSet Note: Wall Street estimates include both Education and Corporate businesses Permission to use quotations neither sought nor obtained 1 Revenue estimates in 2021E provided after Q4’19 earnings 8Analysts’ estimates recognize Instructure’s challenging operating environment Consensus Estimates Key Observations Revenue growth Operating margin 2020E 2021E 2020E 2021E • Reduced growth and profitability expectations highlight 1 In Jan 2019 23.6% 20.1% (3.9%) 0.5% challenges facing the business • Median EV/CY20E sales multiples for sub 20% software In Dec 2019 17.7% 15.5% (5.2%) (1.2%) growers are 5.4x (SunTrust, 2/14/2020) (590)bps (460)bps (130)bps (170)bps Canvas Bridge “We suspect that the future standalone growth profile for
Recent2021
(3%) quarterly
consensus
results
20%have
/ N/A
exposed
17% the
/ (3%)
risks18%
to the
/ (2%)
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Analyst
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commentary
Q2-19 Q3-19
“NewT+1
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(5%) growth
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“INST(Qtr.
reported
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reduction
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in the7/30/2019
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Raymond
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10/29/2019
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outlook,
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and co.
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that slowing
deceleration
higher- “Given
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lack ofTTM
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Macquarie
falling
2/20/2019
short of
billings
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(+12% and
y/y)
employee
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much Morgan/ learning,
Stanley 4/30/2019
ed deal activity
D.A. Davidson
(mainly profitability
more cautiousandpicture
cash generation,
on future 7/30/2019
deferred revenue
growth consensus,
prospects.”but
Raymond
this is anJames
uphill10/29/2019
climb in a domestically)
Two consecutive
isn'tquarters
full reflected
of “The
in co.
Instructure
is executing
couldonfind
its pivot
incremental
to “Wesuggests
suspect mixed
that slowing
business
higher-
trends.”
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competitive
lack of medium-term
market in our falling
view, 2020
shortconsensus”
of the billings
investments
and employee
into international
developmentwith
/ learning,
the coreedEducation
deal activity
market
(mainly
salesforce
profitability
and product
and cash
to be
generation,
too Oppenheimer
deferred 2/20/2019
revenue consensus,
Raymondbut
James
this is
7/29/2019
an uphillmore
climbpenetrate”
in a domestically)
onerous”isn't
Macquarie
full reflected
4/30/2019
in Instructure
Citi 10/29/19
couldPermission
find incremental
to use suggests
quotations
mixed
neither
business
soughttrends.”
nor obtained
competitive
9 market in our view, 2020 consensus” investments into international with the core Education market salesforce and product to be too Oppenheimer 2/20/2019 Raymond James 7/29/2019 more penetrate” onerous” Macquarie 4/30/2019 Citi 10/29/19 Permission to use quotations neither sought nor obtained 9Recent quarterly results have exposed the risks to the standalone plan Q4-18 Q1-19 Q2-19 Q3-19 T+1 stock price reaction (5%) (8%) (1%) 6% Rev. growth (Qtr. guide vs. consensus) (5%) 1% (0%) (3%) Revenue growth (change vs. pre-announce) : 2020 consensus 22% / (2%) 21% / (0%) 21% / (1%) 18% /
Our standalone
uncertainty for Instructure
alternative growth
faces serious
of 14%headwinds
heading into
Rapid
2020
deceleration
as the Canvas
of revenue
marketgrowth
appearsunderscores
to be mature.”
the standalone
40% – Needham,
risk about
10/29/2019
which we“We
hadsuspect
been warning
that thethe
future
market….
standalone
“Wegrowth
expect profile
our revenue
for Canvas
growthhas
rates
27%to likely
slow inslowed
futuremore
periods
than1 consensus
Revenue growth
would (Education
imply, a dynamic
only) due
thatto
wea don't
numberthink
of reasons,
is fully appreciated
which may by
include
the street.”
the maturation
17% – Raymond
of our business,
James, slowing
10/29/2019
demand
16%for
15%our12%
platform
10% and
“First-quarter
applications,
results
increasing
were relatively
competition,
in line,
a decrease
but did little
in theto70%
convince
growthusofthat
ourBridge
overallover
markets...”
the longer
65%term
– Instructure
is the right 2019
bet for
Annual
Instructure
ReporttoThose
be making,
who know
and we
us have
best agreed:
been somewhat
51% YoY
surprised
Q4’19 by
organic
the pace
revenue
of deceleration
2 “We believe
in the
there
Canvas
is a heightened
business.” –level
William
of uncertainty
Blair, 4/30/2019
for Instructure
2014 2015
growth
2016of2017
14% 2018
heading
2019
into
2020
2020
2021
as the
2022
Canvas
2023market
1 2 Denotes
appears
organic
to be mature.”
growth; Organic
40% – Needham,
revenue is10/29/2019
equal to Education
“We suspect
only that
revenue
the future
less acquisition
standalonerevenue
growthfrom
profile
MasteryConnect
for Canvas hasand
27%Portfolium
likely slowed
Permission
more than
to use
consensus
quotations
would
neither
imply,
sought
a dynamic
nor obtained
that we10don't think is fully appreciated by the street.” 17% – Raymond James, 10/29/2019 16% 15% 12% 10% “First-quarter results were relatively in line, but did little to convince us that Bridge over the longer term is the right bet for Instructure to be making, and we have been somewhat surprised by the pace of deceleration in the Canvas business.” – William Blair, 4/30/2019 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1 2 Denotes organic growth; Organic revenue is equal to Education only revenue less acquisition revenue from MasteryConnect and Portfolium Permission to use quotations neither sought nor obtained 10Our standalone alternative faces serious headwinds Rapid deceleration of revenue growth underscores the standalone risk about which we had been warning the market…. “We expect our revenue growth rates to slow in future periods 1 Revenue growth (Education only) due to a number of reasons, which may include the maturation of our business, slowing demand for our platform and applications, increasing competition, a decrease in the 70% growth of our overall markets...” 65% – Instructure 2019 Annual Report Those who know us best agreed: 51% YoY Q4’19 organic revenue 2 “We believe there is a heightened level of
The Board ran
preliminary 4 5a4thoughtful,
1 1 11 3 3 exhaustive
3 1 3 2 2 6and
proposals
deliberate
Total
process
final bids
that 2thoroughly
2 3 1 1 3 1tested
1 1 1buyer
2 2 3 interest
2 Publicly
Transaction
announcedAnnounced
ûüûûûûûüûû
12/4/19
üûûû strategic
5/13/19 2/12/19
alternatives
2/4/19
Go-shop
12/24/18
üûüüüûüûûûûûûû
11/12/18 11/11/18
• 2nd 3/6/18
most exhaustive
11/27/17 process
5/30/17measured
5/1/17 5/31/16
by parties
4/18/16
contacted
2/14/16
andTransaction
NDAs signed,
value
with
$2.0
~2x
$0.5
the$3.7
average
$10.9
parties
$1.9 $5.7
contacted
$1.9 $1.1
pre-transaction
$0.5 $0.6 $0.5
announcement
$1.8 $1.6 $0.6
• Only
($bn)
transaction
Total contacted
where the55strategic
34 23 53review
65 17was
23 11
publicly
9 5 27announced
2 1 1 22 50and
19the
(sponsors/strategics)
board was able to (29/26)
negotiate
(16/18)
a go-shop
(12/11)
Note:
(30/23)
Transactions
(33/32)include
(8/9) (9/14)
acquisitions
(2/9) (3/6)
of public
(2/3) Software-as-a-Service
(20/7) Pre / Post announcement
companies40/15
by a private
22/0 12/22
equity
1/22
acquiror
15/38 65/0
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12/38 17/0
than23/0
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19/0transaction
9/0 5/0 27/0
value
contacted
for the NDAs
past five
signed
years231 73 11
Not4broken
19 31 8out
7 12
in 8proxy
4 5 -filing;
20 Total
Metrics
preliminary
represents
4 5 an
4 1average
1 11 3 3of3the
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2 2 6 proposals
acquisitions
Total final
of public
bids Software-as-a-Service
2 2 3 1 1 3 1 1 1 1 2 2 companies
3 2 Publicly
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ûüûûûûûüûû
acquiror
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with
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Go-shop
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üûüüüûüûûûûûûû
million 11 • 2nd most exhaustive process measured by parties contacted and NDAs signed, with ~2x the average parties contacted pre-transaction announcement • Only transaction where the strategic review was publicly announced and the board was able to negotiate a go-shop Note: Transactions include acquisitions of public Software-as-a-Service companies by a private equity acquiror with greater than $250 million transaction value for the past five years 1 3 Not broken out in proxy filing; Metrics represents an average of the remaining acquisitions of public Software-as-a-Service companies by a private equity acquiror with transaction value less than $500 million 11The Board ran a thoughtful, exhaustive and deliberate process that thoroughly tested buyer interest Transaction Announced 12/4/19 5/13/19 2/12/19 2/4/19 12/24/18 11/12/18 11/11/18 3/6/18 11/27/17 5/30/17 5/1/17 5/31/16 4/18/16 2/14/16 Transaction value $2.0 $0.5 $3.7 $10.9 $1.9 $5.7 $1.9 $1.1 $0.5 $0.6 $0.5 $1.8 $1.6 $0.6 ($bn) Total contacted 55 34 23 53 65 17 23 11 9 5 27 2 1 1 22 50 19 (sponsors/strategics) (29/26) (16/18) (12/11) (30/23) (33/32) (8/9) (9/14) (2/9) (3/6) (2/3) (20/7) Pre / Post announcement 40/15 22/0 12/22 1/22 15/38 65/0 12/38 17/0 23/0 11/0 19/0 9/0 5/0 27/0 contacted NDAs signed 23 7 11 4 19 31 8 7 12 8 4 5 - 20 Total
A year long,$55
standalone conflict-free
$50 Thomaprocess
Bravo with
deal 55
price:
parties
$47.60
Thoughtful,
$45 Transaction
Comprehensive
Process Strategic
Becomes Process
announced
“We$40
have
Public
read Activist
lots of interesting
$35 Agitation
merger
andbackground
2/19: 4/29: •7/29:
Led by
Accumulation
directors with
Q4significant
earnings –deal
(5%)experience
Q1 earnings
materials...
– (8%) Q2 Weearnings
have never
– (1%)
seen$30
suchJan-19
an exhaustive
Mar-19 May-19
list • Board
Jul-19
engaged
Sep-19
with
Nov-19
any parties
Jan-20interested
Stage 1: Stage
in a transaction
2: Stage 3:ofPost-signing
financial sponsors
Initial and
inbound
potential
discussions
strategic
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acquirers
strategic
• Engaged
review
with
go-shop
55 parties
Explore
(29 sale
financials,
Board 26
oversaw
strategics)
initial
involved
discussions
in anwith
M&A financial
scenario.”
sponsors
• 23 NDAs
Strategic
(including
Actions 2Committee
with go-shop
conducted
parties),a 4Engaged
preliminary
withproposals
24 transaction
in stage
review
3 – SunTrust
of the company
Robinson
strategy
Humphrey,
and options
December
parties,
26,no
2019•
new Share
Transaction
price affected
Committee
during
proposals
processoversaw
by activists
a robust
and press
and exhaustive
rumors • Board
processapproved
Permission
highest
to use
offer
quotations
as superior
neither
to all
sought
options
norincluding
obtainedstandalone
12 $55 $50 Thoma Bravo deal price: $47.60 $45 Transaction Process Becomes announced $40 Public Activist $35 Agitation and 2/19: 4/29: 7/29: Accumulation Q4 earnings – (5%) Q1 earnings – (8%) Q2 earnings – (1%) $30 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Stage 1: Stage 2: Stage 3: Post-signing Initial inbound discussions Focused strategic review go-shop Explore sale Board oversaw initial discussions with financial sponsors Strategic Actions Committee conducted a Engaged with 24 transaction review of the company strategy and options parties, no new Transaction Committee proposals oversaw a robust and exhaustive process Permission to use quotations neither sought nor obtained 12A year long, conflict-free process with 55 parties Thoughtful, Comprehensive Strategic Process “We have read lots of interesting merger background • Led by directors with significant deal experience materials... We have never seen such an exhaustive list • Board engaged with any parties interested in a transaction of financial sponsors and potential strategic acquirers • Engaged with 55 parties (29 financials, 26 strategics) involved in an M&A scenario.” • 23 NDAs (including 2 with go-shop parties), 4 preliminary proposals in stage 3 – SunTrust Robinson Humphrey, December 26, 2019• Share price affected during process by activists and press rumors • Board approved highest offer as superior to all options including
Stage 1 (Initial inbound discussions) – Board oversaw initial discussions with financial sponsors ● Received inbound interest from 3 financial sponsors including a “preliminary proposal” from one party in January 2019 ● Board evaluated the preliminary proposal, with assistance from external advisors, and determined it was not attractive at the time after party reduced its offer ● The Board directed management to continue to have discussions with any and all parties that expressed interest and appointed Lead Independent Director Lloyd (Buzz) Waterhouse to proactively engage with shareholders on the Company’s strategic direction ● From April to June 2019, an additional 3 financial sponsors expressed interest and entered into NDAs ● Management engaged with all 6 financial sponsors during June and July (6 financial sponsors total signed NDAs during stage 1), leading the Board to decide to review the company strategy and options 13Stage 1 (Initial inbound discussions) – Board oversaw initial discussions with financial sponsors ● Received inbound interest from 3 financial sponsors including a “preliminary proposal” from one party in January 2019 ● Board evaluated the preliminary proposal, with assistance from external advisors, and determined it was not attractive at the time after party reduced its offer ● The Board directed management to continue to have discussions with any and all parties that expressed interest and appointed Lead Independent Director Lloyd (Buzz) Waterhouse to proactively engage with shareholders on the Company’s strategic direction ● From April to June 2019, an additional 3 financial sponsors expressed interest and entered into NDAs ● Management engaged with all 6 financial sponsors during June and July (6 financial sponsors total signed NDAs during stage 1), leading the Board to decide to review the company strategy and options 13
Stage 2 (Focused
Separation or shutdown
strategic
of review)
Bridge Extensive
– Strategicindustry
Actionsknowledge.
Committeepotential
conductedforasubstantial
review of the
shutdown
company
cost
strategy
Formerand
CEOoptions
of McGraw-Hill
● Mandate: ûevaluate
Timingstrategic
of separation/shutdown
business decisions
given
forongoing
the Company
Education,
including
Harcourt
capital
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raises, cost
andreductions,
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losses Reynolds
and M&A
and Reynolds
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restructured
Waterhouse
Education
Lead Independent
business û Substantial
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Uncertainty
risksaround
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ofmaterial
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cost●cutting
Separation
required
or shutdown
and significant
of Bridge
capital
Extensive
Kevin Thompson
industry knowledge.
investmentpotential
needed Independent
for substantial
Director
shutdown
● Strategic
cost Former
partnerships
CEO of McGraw-Hill
û Limited value
û Timing
accretive
of opportunities
separation/shutdown
identified
given
Significant
ongoingtransaction
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Harcourt Education,
● Leveraged
andrecapitalization
operating lossesû Reynolds
Limited debt
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Co.value
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arbitrage
on restructured
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Education
includingbusiness
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execution risks
Samanage,
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LOGICnow,trends,
û Dilutive
materialtocost
shareholders
cutting required
and noand
actionable
significant
usecapital
of ● Private
Kevininvestment
Thompson of
investment
debt / equity
needed
andIndependent
Loggly Inc. Currently
Director ●CEO
Strategic
of securities
partnerships
(“PIPE”)
û Limited
proceeds
value
SolarWinds.
accretive opportunities
● Tuck-in acquisitionsû
identified Significant
Limited universe
transaction
of accretive
experience
opportunities
● LeveragedDan
recapitalization
Goldsmith Director
û Limited
and CEO
debt capacity
û Substantial
and value
execution
arbitrage
risk,opportunity
limited options,
including
and Integral
TrustedinMetrics,
developing
VividCortex,
Instructure’s
Samanage,
● Transformational
LOGICnow,acquisitions
û Dilutive tocapital
shareholders
constraints
and strategy.
no actionable
Former
usesenior
of ● Private
executive
investment
at Veeva,ofûdebt
Other
/ equity
parties,and
including
Loggly financial
Inc. Currently
sponsors,
CEOhave
of securities
bid IBM,(“PIPE”)
PwC, andproceeds
Accenture
SolarWinds.
up valuations
● Tuck-in
in the sector
acquisitionsû
At the conclusion
Limited universe
of the review
of accretive
of theopportunities
company strategy
Dan Goldsmith
and options,Director
the Board
andconcluded
CEO û Substantial
to exploreexecution
a potential
risk,
salelimited
of the options,
Company and
14Integral in developing Instructure’s ● Transformational acquisitions capital constraints strategy. Former senior executive at Veeva, û Other parties, including financial sponsors, have bid IBM, PwC, and Accenture up valuations in the sector At the conclusion of the review of the company strategy and options, the Board concluded to explore a potential sale of the Company 14Stage 2 (Focused strategic review) – Strategic Actions Committee conducted a review of the company strategy and options ● Mandate: evaluate strategic business decisions for the Company including capital raises, cost reductions, divestures, and M&A Standalone Alternatives Buzz Waterhouse Lead Independent Director û Uncertainty around marketability of Bridge and ●
Stage 3 (Explore
Metrics, LOGICnowsale and
transaction)
Loggly, Independent
– Transactiondirector
Committee
take oversaw
private ofa SolarWinds
robust and exhaustive
by a consortium
processincluding
● Mandate:
SolverLake
explore interest
and Thomaof third
Bravo
parties
and two
in acquiring
IPOs of the
Instructure
companyand
● manage
Former CFO
the sale
of Surgient,
process ●SAS
PriorInstitute
to signing
andthe
RedHat
Thoma●Bravo
Boarddeal,
member
40 parties
of Instructure
were contacted
and Blackline
(20 prior
(NASDAQ:
to public BL)
announcement)
● Chosen toand
participate
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a non-member
resulted in
basis
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feedback
2 finaltoproposals
the BuzzMembers
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KeyTransaction
qualifications
Committee
Josh Coates
with●respect
Significant
to matters
(7%) considered
Instructure by
shareholder
the committee
Executive
Lead Chairman
Independent
of the
director
Boardon●aFormer
regular Instructure
and as-needed
CEObasis
● Instructure
● Former Board
McGraw-Hill
memberCEO
since●2009
Transaction
● Previously
experience
co-founded
include
and
thesold
saleone
of Harcourt
technology
Education
companyfor
● CEO
$4.95bn
of SolarWinds
and the carve-out
Kevin of
Thompson
McGraw-Hill
● At SolarWinds,
Education and
involved
sale to Apollo
in acquisitions
for $2.4bn
of VividCortex,
15 Samanage, Trusted Metrics, LOGICnow and Loggly, Independent director take private of SolarWinds by a consortium including SolverLake and Thoma Bravo and two IPOs of the company ● Former CFO of Surgient, SAS Institute and RedHat ● Board member of Instructure and Blackline (NASDAQ: BL) ● Chosen to participate on a non-member basis to provide feedback to the Buzz Waterhouse Transaction Committee with respect to matters considered by the committee Lead Independent director on a regular and as-needed basis ● Former McGraw-Hill CEO ● Transaction experience include the sale of Harcourt Education for $4.95bn and the carve-out of McGraw-Hill Education and sale to Apollo for $2.4bn 15Stage 3 (Explore sale transaction) – Transaction Committee oversaw a robust and exhaustive process ● Mandate: explore interest of third parties in acquiring Instructure and manage the sale process ● Prior to signing the Thoma Bravo deal, 40 parties were contacted (20 prior to public announcement) and 19 NDAs, which resulted in 4 preliminary and 2 final proposals Members Key qualifications Josh Coates ● Significant (7%) Instructure shareholder Executive Chairman of the Board ● Former Instructure CEO ● Instructure Board member since 2009 ● Previously co-founded and sold one technology company ● CEO of SolarWinds Kevin Thompson ● At SolarWinds, involved in acquisitions of VividCortex, Samanage, Trusted
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Instructure Board recommends that stockholders vote to approve the transaction ● Now is the right time for this transaction, given the material execution risk in continuing as a standalone public company ● The robust strategic review process considered a broad range of options before the Board ultimately approved this alternative and engaged 55 potential buyers, 23 of which signed confidentiality agreements ● $47.60 per share in cash maximizes value for stockholders, providing superior risk-adjusted value and certainty to all other evaluated opportunities Your Vote Is Important, No Matter How Many Shares You Own! If you have questions about how to vote your shares, please contact: 1407 Broadway, 27th Floor New York, New York 10018 Call Collect (212) 929-5500 or Toll-Free (800) 322-2885 Email: proxy@mackenziepartners.com 19Instructure Board recommends that stockholders vote to approve the transaction ● Now is the right time for this transaction, given the material execution risk in continuing as a standalone public company ● The robust strategic review process considered a broad range of options before the Board ultimately approved this alternative and engaged 55 potential buyers, 23 of which signed confidentiality agreements ● $47.60 per share in cash maximizes value for stockholders, providing superior risk-adjusted value and certainty to all other evaluated opportunities Your Vote Is Important, No Matter How Many Shares You Own! If you have questions about how to vote your shares, please contact: 1407 Broadway, 27th Floor New York, New York 10018 Call Collect (212) 929-5500 or Toll-Free (800) 322-2885 Email: proxy@mackenziepartners.com 19
AppendixAppendix
Roadmap to completion Transaction remains on track to close in Q1 2020 Secured fully Seek Preliminary Seek Received Filed Anticipated Mailed equity financed stockholder proxy remaining early definitive closing date proxy transaction on approval at statement foreign termination proxy statement to signing special filed with SEC regulatory under HSR statement stock- meeting approval holders (last pending approval) Dec 4 Dec 23 Jan 2 Jan 7 Jan 14 End of Feb 13 Feb 14 Jan 20Roadmap to completion Transaction remains on track to close in Q1 2020 Secured fully Seek Preliminary Seek Received Filed Anticipated Mailed equity financed stockholder proxy remaining early definitive closing date proxy transaction on approval at statement foreign termination proxy statement to signing special filed with SEC regulatory under HSR statement stock- meeting approval holders (last pending approval) Dec 4 Dec 23 Jan 2 Jan 7 Jan 14 End of Feb 13 Feb 14 Jan 20
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