Katapult to Become a Publicly Traded Company Through Merger With FinServ

Leading e-commerce focused point-of-sale platform for nonprime consumers

Katapult Holding, Inc., an e-commerce focused financial technology company, and FinServ Acquisition Corp., a special purpose acquisition company, announced that they have entered into a definitive merger agreement. Upon closing of the transaction, the combined company (the “Company”) will operate as Katapult and plans to trade on Nasdaq under the new symbol “KPLT”. The transaction reflects an implied pro forma combined enterprise value for the Company of approximately $1 billion.

Katapult is a leading provider of e-commerce point-of-sale (“POS”) purchase options for nonprime US consumers. Katapult’s fully digital, next generation technology platform provides consumers with a flexible lease purchase option to enable them to obtain essential durable goods from Katapult’s network of top tier e-commerce retailers. Katapult’s sophisticated end-to-end technology platform provides both a seamless integration with merchants and exceptional customer experiences.

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Orlando Zayas, CEO of Katapult, stated, “Today’s announcement marks the beginning of an exciting new chapter in our history and we are delighted to be entering into this transaction with FinServ to become a publicly traded company. Since our inception, Katapult’s goal has always been to provide a clear, transparent, and attractive transaction solution for nonprime consumers to access the essential products they need for everyday living. Today, we are serving over 150 merchants and 1.4 million consumers with our leading technology platform and e-commerce POS solution. This transaction will allow us to accelerate our growth opportunities and continue to build the premier company that provides consumers access to the goods they need and deserve through a flexible lease purchase transaction. It is an honor to lead Katapult’s strategic direction and my pleasure to continue to work with our great team to continue to grow this business.”

Lee Einbinder, CEO of FinServ, stated, “After a comprehensive search process, in which we examined numerous business combination opportunities, Katapult emerged as the most impressive partner, exceeding all of our criteria for a successful transaction. Katapult has a differentiated and best-in-class technology platform, with significant opportunities to continue its growth trajectory by expanding its merchant and consumer base. We are pleased to help facilitate Katapult’s listing on Nasdaq, and excited to be partnering with their entire management team as they continue to lead Katapult’s expansion as a publicly listed company.”

Brian Hirsch, Co-founder & Managing Partner of Tribeca Venture Partners and Director of Katapult, stated, “Katapult’s next generation technology platform, which provides a seamless digital experience for both consumers and merchants, ease of use and quick integration, and sophisticated risk modeling has helped fuel the company’s explosive growth over the past three years under Orlando’s leadership. This transaction provides Katapult with an even greater ability to strategically invest in its organic growth based on the large addressable market they serve.”

Katapult Investment Highlights

• A leading e-commerce POS, lease purchase platform provider focused on the estimated $50 billion of annual nonprime consumer durable goods e-commerce spend
• Delivers a clear and compelling value proposition to both consumers and merchants, transforming the way nonprime consumers shop for essential goods and enabling merchant access to this underserved segment
• Proprietary technology platform, purpose-built for e-commerce, combining superior consumer and merchant experiences with powerful risk management capabilities and scalability
• Established position in e-commerce ecosystem with significant platform support from top-tier e-commerce retailers, leading e-commerce platforms and lending partners
• Attractive, profitable financial profile with approximately $250 million of projected revenue (+172% y/y) for 2020
• Proven and experienced management team, who will continue leading the combined company

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Transaction Summary

Under the terms of the proposed Transaction, FinServ will merge with Katapult at a pro forma combined enterprise value of approximately $1 billion and equity value of $962 million, representing EV/EBITDA multiples of 14.1x and 6.6x projected EBITDA for 2021 and 2022, respectively. Total consideration paid to Katapult’s existing shareholders will be $833 million.

Cash proceeds of the transaction will fund up to $325 million of cash consideration to Katapult’s existing shareholders and $50 million of cash to Katapult’s balance sheet. The cash components of the transaction will be funded by FinServ’s cash in trust of $250 million (assuming no redemptions) as well as a $150 million private placement of common stock at $10 per share from various institutional investors, led by Tiger Global Management and Neuberger Berman Funds, that will close concurrently with the merger. The balance of the consideration to Katapult’s equity holders will consist of equity in the Company. Existing Katapult equity holders have the potential to receive an earnout for additional shares of equity if certain price targets are met as set forth in the definitive merger agreement. Katapult’s current equity holders will own approximately 50% of the pro forma company, assuming no cash redemptions.

The transaction is expected to close during the first half of 2021 and remains subject to approval by FinServ stockholders representing a majority of the outstanding FinServ voting power, the effectiveness of a registration statement to be filed with the Securities and Exchange Commission (the “SEC”) in connection with the transaction, the expiration of the HSR Act waiting period, and other customary closing conditions. The Boards of Directors of both Katapult and FinServ have unanimously approved the contemplated transaction.

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