We are investigating MINDBODY, Inc. (MB) (“MINDBODY” or the “Company”) for potential violations of the federal securities laws.
On November 6, 2018, MINDBODY issued disappointing guidance for the Company’s upcoming fourth quarter 2018, attributing it to integration issues with MINDBODY’s early 2018 acquisitions. The market, having previously been informed that the integrations in question were on track, reacted poorly, causing the price of MINDBODY Class A common stock to fall by approximately 20 percent on November 7, 2018. Shortly thereafter, by press release dated December 24, 2018, MINDBODY informed investors that the Company’s Board had approved a merger agreement with Vista Equity Partners Management, LLC (“Vista”). Pursuant to the agreement, holders of the Company’s common stock would receive $36.50 in exchange for their shares, with Vista taking MINDBODY private upon completion. MINDBODY touted this as a 68 percent premium to the Company’s December 21, 2018 closing price, which price was still depressed by the surprising and suspiciously timed negative guidance issued on November 6, 2018. Unknown to MINDBODY investors, however, is that by January 18, 2019, MINDBODY knew that its fourth quarter 2018 results had materially exceeded not only current analyst estimates, but also those estimates issued prior to the disappointing November 6, 2018 guidance. During January and February, the Company issued proxy materials urging MINDBODY shareholders to vote “FOR” the transaction, touting the price of $36.50 as a substantial premium for MINDBODY shareholders. These proxy materials, however, failed to disclose the “meaningful” fourth quarter 2018 results necessary for investors to make an informed decision whether to vote in favor of the proposed transaction. Based, in part, on MINDBODY’s failure to disclose its favorable fourth quarter 2018 financial results, which would have raised questions regarding whether the merger consideration was fair, MINDBODY shareholders approved the transaction on February 14, 2019. The following day, the Company reported the closing of the transaction, and MINDBODY shareholders received $36.50 in exchange for their shares.