8-K: Olo Faces Shareholder Lawsuits Over Thoma Bravo Merger

Olo Inc. has filed an 8-K to disclose multiple shareholder lawsuits challenging its proposed merger with Project Hospitality Parent, an affiliate of Thoma Bravo, and to provide supplemental disclosures to its proxy statement.

Summary

• Olo Inc. is facing three shareholder lawsuits (Conners, Thompson, Herzog) filed on August 18 and 19, 2025, in New York State Supreme Court.
• The lawsuits allege negligent misrepresentation and concealment, and negligence, claiming material information was omitted from the Definitive Proxy Statement filed on August 8, 2025, regarding the merger with Project Hospitality Parent (an affiliate of Thoma Bravo).
• The Herzog complaint also asserts violations of the Illinois Securities Act against Thoma Bravo entities.
• Plaintiffs seek an injunction against the stockholder vote or merger closing, additional disclosures, rescission of the merger if consummated, and unspecified damages and legal fees.
• Olo has also received demand letters from purported stockholders seeking additional disclosures.
• The company denies the allegations and believes supplemental disclosures are not legally required but is voluntarily providing them to avoid nuisance and potential delays.
• Supplemental disclosures include details on Board discussions regarding fiduciary duties and potential conflicts of interest for directors and significant stockholders (Mr. Glass, Raine, Raqtinda).
• Goodwin, Olo's legal counsel, has represented Thoma Bravo on unrelated matters in the past and may do so in the future, but not for this merger.
• Goldman Sachs' financial analyses (Discounted Cash Flow, Present Value of Future Share Price, Selected Publicly Trading Companies, Selected Precedent Transactions) have been supplemented with additional details on inputs and methodologies, including specific net cash figures and share counts.
• Unaudited prospective financial information (Projections) now includes implied tax savings from NOLs, ranging from $1 million in 2026 to $30 million in 2029.
• The 2025 projections for total revenue were adjusted from $351 million to $354 million, and gross profit from $202 million to $204 million, based on updated information as of March 31, 2025.

Sentiment

Score: 4

Explanation: The filing indicates ongoing shareholder litigation challenging the merger, which introduces uncertainty and potential delays. While the company is vigorously defending and providing supplemental disclosures, the existence of these lawsuits is a negative factor. However, the company's proactive steps to address the claims and the slight upward adjustment in 2025 projections offer some balance.

Positives

• Olo is vigorously defending against the complaints and demand letters, indicating confidence in its position.
• The company is voluntarily providing supplemental disclosures to avoid delays, which could be seen as a proactive step to facilitate the merger.
• The updated 2025 projections show a slight increase in total revenue (from $351 million to $354 million) and gross profit (from $202 million to $204 million).

Negatives

• Multiple shareholder lawsuits have been filed, alleging material omissions and misrepresentations in the merger proxy statement.
• The lawsuits seek significant remedies, including injunctions against the merger, rescission, and unspecified damages.
• The litigation introduces uncertainty and potential delays to the merger process.
• The company acknowledges the possibility of additional demand letters or lawsuits.

Risks

• The proposed Merger may not be completed in a timely manner or at all.
• Failure to satisfy any conditions to the consummation of the Merger, including regulatory approvals.
• Occurrence of any event that could lead to the termination of the Merger Agreement, potentially requiring Olo to pay a termination fee.
• Adverse effects on Olo's business relationships, operating results, and general business due to the announcement or pendency of the transaction.
• Disruption of Olo's current plans and operations.
• Challenges in retaining and hiring key personnel and maintaining relationships with key business partners and customers.
• Diversion of management's attention from ongoing business operations.
• Unexpected costs, charges, or expenses resulting from the proposed Merger.
• Potential litigation relating to the Merger, including the current lawsuits, and the effects of any outcomes.
• Continued availability of capital and financing and rating agency actions.
• Certain restrictions during the pendency of the Merger that may impact Olo's ability to pursue business opportunities or strategic transactions.
• Unpredictability and severity of catastrophic events (terrorism, war, hostilities).
• Impact of adverse general and industry-specific economic and market conditions.
• Uncertainty as to the timing of completion of the proposed Merger.
• Legislative, regulatory, and economic developments affecting Olo's business.

Future Outlook

The company's forward-looking statements indicate that actual results may differ materially from projections due to various known and unknown risks, including the timely completion of the merger, regulatory approvals, potential termination, business disruption, personnel retention, litigation outcomes, and broader economic conditions. The company does not undertake to update these statements unless required by law.

Management Comments

• "The Company cannot predict the outcome of any litigation, the Complaints or the Demands."
• "The Company and the individual defendants intend to vigorously defend against the Complaints, Demands and any subsequently filed complaints or similar actions."
• "The Company believes that the allegations in the Complaints and Demands are without merit and supplemental disclosures are not required or necessary under applicable laws."
• "Nevertheless, in order to moot the disclosure claims and avoid nuisance and possible expense and business delays, the Company has determined voluntarily to supplement certain disclosures in the Definitive Proxy Statement."
• "To the contrary, the Company specifically denies all allegations in the Complaints and Demands that any additional disclosure was or is required or is material."

Industry Context

The filing highlights the ongoing trend of private equity acquisitions in the technology sector, with Thoma Bravo being a prominent player. The scrutiny of proxy statements and the prevalence of shareholder litigation in M&A transactions are common, reflecting increased investor activism and regulatory focus on disclosure adequacy. The use of financial advisors like Goldman Sachs and legal counsel like Goodwin, and their potential conflicts, are standard considerations in complex M&A deals.

Comparison to Industry Standards

• Goldman Sachs' analysis included a 'Selected Publicly Trading Companies Analysis' and 'Selected Precedent Transactions Analysis' to derive valuation ranges, which are standard methodologies in M&A advisory.
• The 'Premia Paid Analysis' reviewed 90 all-cash acquisition transactions since July 1, 2020, involving public technology companies in the U.S. with enterprise values over $1 billion, providing a benchmark for acquisition premiums.
• The discount rates (WACC 12.0%-15.0%, cost of equity 13.5%) and perpetuity growth rates (2.0%-4.0%) used in the DCF analysis are within typical ranges for technology companies, reflecting market expectations for long-term growth and inflation.

Corporate Governance

Legal Proceedings

• Conners v. Olo Inc., et al., No. 654927/2025, filed August 18, 2025, in Supreme Court of the State of New York, New York County.
• Thompson v. Olo Inc., et al., No. 161043/2025, filed August 19, 2025, in Supreme Court of the State of New York, New York County.
• Herzog v. Cancel, et al., No. 69023/2025, filed August 18, 2025, in Supreme Court of New York, Westchester County.
• All complaints allege negligent misrepresentation and concealment and negligence in violation of New York State common law for purportedly misrepresenting and/or omitting material information from the Definitive Proxy Statement.
• The Herzog complaint also asserts claims for violation of the Illinois Securities Act against Thoma Bravo, L.P., Thoma Bravo Discover Fund IV, L.P., Project Hospitality Parent, LLC, and Project Hospitality Merger Sub, Inc.
• Plaintiffs seek an injunction enjoining the stockholder vote or closing of the merger, an order requiring additional information, rescission of the merger if consummated, costs of the action (including attorneys' and experts' fees), and/or unspecified damages and expenses.
• The company has also received demand letters from purported stockholders seeking additional disclosures.

Related Party Transactions

• The Board discussed potential participation and conflicts of interest for significant stockholders: Mr. Glass (CEO, director, significant stockholder), The Raine Group (Raine) and Raqtinda Investments LLC (Raqtinda), given Brandon Gardner's roles (Chairman, Founding Partner/President of Raine), Colin Neville's roles (Board member, Partner at Raine), and David Frankel's roles (Board member, Manager of Raqtinda).
• Goodwin, Olo's legal counsel, represented Thoma Bravo on unrelated matters previously and may continue to do so, but did not represent Thoma Bravo in connection with the Merger.

Stakeholder Impact

• Shareholders are directly impacted by the merger, the litigation challenging it, and the potential for delays or changes to the merger terms. The supplemental disclosures aim to provide more information to aid their voting decision.
• Management and the Board are facing litigation and increased scrutiny, requiring time and resources for defense and disclosure.
• Employees may experience uncertainty regarding the future of the company under new ownership, and risks related to retention if the merger is disrupted.
• Customers and business partners may face potential impact on business relationships if the merger is delayed or terminated.

Next Steps

• Stockholder vote on the merger (if not enjoined).
• Consummation of the Merger.
• Company will continue to vigorously defend against the Complaints and Demands.
• Possible receipt of additional demand letters or filing of other lawsuits arising from the Merger.

Key Dates

Recommendation

The ongoing shareholder litigation introduces significant uncertainty regarding the completion and terms of the merger. While the company is defending its position and providing additional disclosures, the potential for delays, injunctions, or even rescission of the merger creates a cautious outlook. The slight upward adjustment in 2025 projections is a minor positive, but it is overshadowed by the legal challenges. Investors should hold to monitor the outcome of the litigation and the merger process, as the situation is fluid and could swing either way. A 'buy' would be too risky given the legal overhang, and a 'sell' would be premature without a clearer indication of the litigation's impact on the deal's viability or terms.

Keywords

Olo Inc., Thoma Bravo, Merger, SEC Filing, 8-K, Shareholder Lawsuit, Proxy Statement, Corporate Governance, Financial Projections, Goldman Sachs, Acquisition, Technology Industry, Litigation, M&A