Blackstone’s recently announced equity investment in Dallas-based software provider ISN had a number of unique aspects to it, according to Bell Nunnally partner Larry Shosid.
The commitment, announced earlier this month, was ISN’s first outside investment and makes Blackstone the company’s only shareholder outside the company. The injection was also led by Blackstone Growth (BXG), a new fund established in 2019 to focus on providing growth capital to companies.
But perhaps most surprising was that it reunited him professionally with a former colleague: ISN general counsel Jim Skochdopole, who was previously a managing partner at Bell Nunnally from 1999 to through 2019.
“This was a great opportunity for getting to work with Jim again, and ISN has been a client of the firm for 20 years,” Shosid, who led the team that advised ISN on the deal, tells The Texas Lawbook. “It was great management, a great group of guys, and so it was great just to have the opportunity to work with them again. And see them, you know, sort of joking, become an overnight success after 20 years.”
ISN’s software platform, ISNetworld, helps companies source and manage relationships with contractors and suppliers while ensuring compliance with company, industry and regulatory standards. Blackstone believes the company’s offerings will become even more important as companies and shareholders place increasingly more focus on environmental, social and corporate governance (ESG) matters. The firm noted in a release that ISN has more than 650 clients, over 170 of which are Fortune 500 companies, that rely on its software to manage compliance data for more than 75,000 contactor subscribers across 85 countries.
“Companies and boards around the world are increasingly focused on ensuring the highest standards for risk management, compliance and ESG reporting,” Vini Letteri, a senior managing director at BXG, said in the release.
“We believe ISN is leading the way, and that Blackstone can be a key partner in supporting its further growth. ISN is the perfect example of the type of company we’re looking to invest in at Blackstone Growth: it has outgrown traditional growth equity, but not Blackstone.”
Reports pegged the investment at $500 million that valued the company at $2 billion. Shosid says those figures, which give Blackstone a roughly 25% minority stake in the company, are “in the ballpark.”
Shosid says ISN had received a lot of interest from potential investors and had turned down several opportunities before being approached by Blackstone.
“It was a good transaction for both sides,” he says. “And both their interests are aligned. And so it’ll be interesting to see what the future holds for this company. But it’s a great company, and they’re definitely on the offense.”
Looking ahead, Shosid says he is optimistic for the transactional market in 2021. Though the market was temporarily paralyzed by the Covid-19 pandemic earlier this year, Bell Nunnally’s mergers and acquisitions practice kept busy in 2020.
“I think we had the best year we’ve ever had, to be quite honest with you,” he says. “So I think that we’re real bullish on the future….And we see we have some good tailwinds heading into 2021.”