VersaPay CEO Craig O'Neill. Haywood Capital Markets analyst Daniel Rosenberg likes the deal on offer for private equity firm Great Hill Partners to purchase fintech company VersaPay (VersaPay Stock Quote, Chart, News TSXV:VPY), saying in a note to clients on Monday that Great Hill would make a strong strategic fit for VersaPay. Toronto-based VersaPay, a cloud-based invoice and payments business which offers its ARC SaaS platform, announced the proposed deal on Friday, which would see VPY shareholders receive cash consideration of $2.70 per share for a total of approximately $126 million on a fully diluted basis. The deal, which is not subject to a financing condition, represented a 47.5 per cent premium to the closing price on December 12 and a 64.5 per cent premium to the volume weighted average price (VWAP) of VPY over the last 30 trading days. (All figures in Canadian dollars unless where noted otherwise.) \u201cWe are very pleased to be able to recommend this transaction to our shareholders, employees and customers,\u201d said Art Mesher, Chairman of VersaPay, in a press release. \u201cWith their deep knowledge of our industry and focus on supporting growth companies, Great Hill is uniquely positioned to understand our business and its long term potential, and help the Company to achieve that potential.\u201d Rosenberg said that along with the attractive offer price, Boston-based Great Hill\u2019s experience in fintech make it a good fit as it has a portfolio of companies including six other fintech names, some of which operate in adjacent verticals to VersaPay. \u201cFollowing a few soft growth quarters, VersaPay is now showing signs of improvement with a strong backlog, ARR growth and new customer wins. The Company has built a robust product however achieving scale requires capital. The offer is a good fit for the Company and at an attractive price to shareholders,\u201d wrote Rosenberg. Of VersaPay, Rosenberg said that the ARC platform addresses a \u201cmajor pain-point in a very large and underserved accounts receivable market,\u201d where the A\/R market is in excess of US$5 billion with 88 per cent of firms still relying on paper invoices. \u201cThe ARC platform helps customers solve a visible pain-point and is a sticky product. The ARC platform is scalable with high gross margins and high recurring revenue,\u201d Rosenberg wrote. Looking at VersaPay\u2019s financials, Rosenberg thinks the company will generate calendar 2019 revenue and adjusted EBITDA of $8.8 million and negative $9.6 million, respectively, and calendar 2020 revenue and adjusted EBITDA of $13.9 million and negative $4.9 million, respectively. The analyst has noted that VPY\u2019s board is unanimously recommending that shareholders vote in favour of the transaction and that directors and senior officers, who represent about 3.7 per cent of VPY shares, have also entered into agreements to vote in favour of the deal. A special meeting is expected in February to finalize the vote. Rosenberg has changed his recommendation for VPY from \u201cBuy\u201d to \u201cTender\u201d and raising his target price from $2.30 per share to $2.70 per share, which at press time represented a projected return of 1.5 per cent.