Diligent Corporation

Diligent Corporation, known as Diligent, is a software as a service (Saas) company that enables board members of corporations, government organisations and not-for-profit groups to share and collaborate information for board meetings. Headquartered in New York City, the company has offices in Christchurch, New Zealand, London, UK, Washington, DC, Charlotte, Amsterdam, and Munich. Diligent was listed on the New Zealand NZX main board stock exchange under ticker code DIL.

Diligent Corporation
TypePrivate Company
IndustrySoftware as a service
Founded1994 (1994)
(as Manhattan Creative Partners)
FoundersBrian Henry
Kiri Borg
Headquarters
New York City, New York
,
U.S.
Area served
Global
Key people
Brian Stafford (CEO)
ProductsSecure modern governance technology solutions
ServicesCorporate software
Revenue$330 million (2019)
SubsidiariesDiligent Institute
Websitediligent.com

The company's main products are based on a software as a service (SaaS) model and sold by subscription. These include corporate governance technologies, such as a board portal, entity governance, director messaging, and voting tools for board directors and executives.[1] Diligent's products are used by 60 percent of all Fortune 1000 companies.[2]

History

Early history

Diligent was founded by Brian Henry and Kiri Borg in 1994 as Manhattan Creative Partners (MCP).[3] In 1998, SunAmerica became a client of Manhattan Creative Partners after SunAmerica director Peter Harbeck and Brian Henry discovered a joint passion as airplane owners and recreational pilots. In 1999, Alessandro Sodi was hired and trained by Henry and Borg to assist in account management. Eventually, Henry turned over the day-to-day management of the SunAmerica account to Sodi.

In 2000, when SunAmerica expressed their desire to do away with their burdensome hard-copy corporate board paper books, Henry conceived of and hand-drew the design for the original and first web-based "Boardbook." Marco Morsella, the first employee hired by Henry and Borg in 1997 to be MCP's graphic designer, created a digital GUI based on Henry's design. SunAmerica became the first company to license the new, web-based Boardbook. Henry and Borg, and later the Diligent Partners, recognized the value of this innovative technology and invested most of the profits from other consultancy projects into the continuing development of the new software product.

New company

In 2003, Henry and Borg formed Diligent Partners, together with Sharon Daniels, Dan Kiley, Kenneth Carroll, Alessandro Sodi, Marc Daniels and Robert Craig.[3] Henry was named CEO of the new entity, Sodi, President, and Carroll, Chairman. At the same time, the company renamed MCP to Diligent Board Member Services "to reflect the firm's shift of focus to corporate governance service delivery."[3] By 2006, Diligent had expanded to Europe, Canada, and the UK.

Initial public offering

Diligent listed on the New Zealand Exchange (NZX) in 2007 with a $24m NZX IPO, valuing the company at $115m. While fundraising for the company was successful, prior to the company listing some information became public regarding bankruptcies of original founder and CEO Brian Henry and his brother Gerald Henry. These bankruptcies occurred in the late 1980s due to the 1987 share market crash. Gerald Henry was given jail term for fraud in 1991 due to a subset of US law.[4][5] Diligent released a statement clarifying that Gerald Henry was not associated with the company.[6]

The day following Diligent's listing, the company announced Henry's resignation as CEO due to the oversight of the disclosure of this information. However, some journalists at the time claimed that Diligent's PR firm and attorneys "should have advised Henry to publicly acknowledge his history."[5] In fact, Diligent's IPO attorney, Mark Russell, said his firm, Buddle Findlay, "was proud to have our brand associated with Diligent and with Brian in particular. We have no concerns whatsoever."[5] It was reported that "Diligent's promoters and directors, including director Mark Russell of law firm Buddle Findlay, knew of Brian's connection with Energycorp, but decided not to disclose. Coincidentally, Russell, in the 1980s worked for the Bank of New Zealand, which had lent the company $15.5m on a handshake."[5] Henry was replaced by Alessandro Sodi, who was then President. Henry remained on the Board, his value to the company recognised by the other members of the board.[7] Diligent's share price collapsed to $0.14 by March 2009 but later recovered to lead the pack of technology listings.[8]

Company growth and revenue restatement issues

With the release of the Apple iPad in 2010, Diligent developed an app for this new platform and commenced a period of explosive growth in client numbers. Diligent made its first operating profit in 2012. Between 2011 and 2012, company revenue grew by 165%.[9] By mid-2013, the Diligent stock price had reached over $8.00 NZD a share.

In August 2013, Diligent announced that it would need to restate revenue for the current and preceding three years due to discrepancies in company accounting practices. No fraud was involved, though the company was required to recognize revenue from the date of a contract being signed rather than the start of a month, and its installation fees recognized over a longer period of time. The company also acknowledged that its accounting systems were underdeveloped and required improvement.[10] It was fined by the NZX for a number of minor breaches of listing rules.[11]

Alessandro Sodi stepped down as CEO 2015 to focus on the launch of Diligent Teams as Chief Product Strategy Officer. Sodi was succeeded by current CEO Brian Stafford, an ex-Mckinsey partner and software-as-a-service specialist.[12]

Return to private ownership

On 14 February 2016, Diligent announced that it had entered into a definitive agreement to be acquired by Insight Partners for consideration of $4.90 per share, valuing the company at $624M USD, subject to approval from the shareholders.[13] A Shareholder meeting was held in Auckland, NZ on 13 April 2016 and having received 57% votes in favor of the Merger (as it was structured), Diligent de-listed from the NZX and returned into private hands.[14] The merger was opposed by the NZ Shareholders Association who considered the offer too low, stating that "current offer is low compared to where the company's prospects have been in the past"[14]

Since 2016, Diligent has restructured its leadership team and acquired new companies, including Brainloop, BoardPad, Boardroom Resources[15][16][17] and Manzama.[18]

In December 2018, Diligent announced the launch of the Diligent Institute, a think tank aiming to provide customers with global research on governance practices.[19][20]

Modern Leadership Initiative

In June 2020, Diligent launched its Modern Leadership Initiative and partnered with more than 20[21] private equity companies to improve board-level diversity. Each private equity firm agreed to open board seats of five of their portfolio companies to racially diverse candidates. The private equity firms included Insight Partners, Vista Equity Partners, Hellman & Friedman, Hg, Genstar Capital,[22] The Jordan Company, and TA Associates, and also New Mountain Capital, Francisco Partners, Heidrick & Struggles, Egon Zehnder, and the American Investment Council.[21][23]

Corporate affairs

Leadership

Diligent is managed by CEO Brian Stafford. Other key executives are:[24]

  • Amanda Carty, Chief Marketing Officer
  • Avigail Dadone, Chief People Officer
  • Lisa Edwards, President and Chief Operating Officer[25]
  • Michael Flickman, Chief Technology Officer
  • Michael Stanton, Chief Financial Officer
  • Ken Surdan, Chief Product Officer
  • Jack Van Arsdale, Vice President of Legal

Customer and revenue

As of 2019, the company reported more than 16,500 customers[26] and 550,000 individual users from more than 90 countries. In 2018, the company reported revenues exceeding $200 million[27][28] and in July 2019 crossed $300 million in annual recurring revenue (ARR).[26]

Products

Diligent's products are based on a software as a service (SaaS) model and sold by subscription. They are joined within the “Governance Cloud” and offer a secure set of corporate governance software.[29] After the COVID-19 outbreak Diligent in March 2020 started to offer K–12 public school districts and mission-based nonprofits free access to its board software.[30]

Awards

Diligent was recognized in the Deloitte Technology Fast 500 three times, ranking #98 in 2014,[31] #420 in 2016[32] and #433 in 2020.[33]

In 2018 and 2019, Diligent was named one of Inc. 5000’s Fastest Growing Private Companies in America.[34][35]

References
  1. "Dusty Prodigy Accounts, Lost Tablets Put Company Secrets at Risk". www.bloomberg.com. Retrieved 3 September 2019.
  2. Hilson, Gary. "Diligent's new tool helps corporate boards evaluate themselves and improve". IT Business. Retrieved 3 September 2019.
  3. "Diligent Investment Statement and Prospectus" (PDF). New Zealand Government's Registrar of Companies (societies.govt.nz). pp. 35, 42. Retrieved 19 March 2016.
  4. "Briefcase: The Diligence of the modern director | The National Business Review". nbr.co.nz. 1 March 2013. Retrieved 26 January 2016.
  5. "Opinion piece: Less than Diligent disclosure turns ugly". sharechat.co.nz. 14 December 2007. Retrieved 26 January 2016.
  6. Parker, Tamsyn Parker, Tamsyn (13 December 2007). "Diligent boss walks as past haunts listing". ISSN 1170-0777. Retrieved 12 June 2019.
  7. "Diligent CEO resigns, stays on board". stuff.co.nz. 1 January 2009. Retrieved 26 January 2016.
  8. "Diligent okays $6m share issue - Business - NZ Herald News". nzherald.co.nz. 12 March 2009. Retrieved 26 January 2016.
  9. "Diligent expects to make milestone profit - Business - NZ Herald News". nzherald.co.nz. Retrieved 26 January 2016.
  10. "Diligent to restate revenue of past three years – US sales slow". nbr.co.nz. Retrieved 25 January 2016.
  11. "Diligent censured, fined for numerous listing rules breaches". nbr.co.nz. 6 September 2013. Retrieved 26 January 2016.
  12. Wednesday; April 2015, 1; BusinessDesk, 9:38 am Article. "Diligent names Brian Stafford as CEO, replacing Sodi | Scoop News". www.scoop.co.nz. Retrieved 22 August 2019.CS1 maint: numeric names: authors list (link)
  13. "Diligent to Be Acquired by Insight Venture Partners for $US 4.90 Per Share in Cash | Business Wire". www.businesswire.com. Retrieved 20 May 2016.
  14. Herald, New Zealand. "Diligent shareholders greenlight takeover by Insight Venture Partners". m.nzherald.co.nz. Retrieved 20 May 2016.
  15. "Diligent Corporation's Acquisition of Brainloop AG – Global Legal Chronicle". Retrieved 29 September 2019.
  16. "DILIGENT ACQUIRES BOARDPAD AND BLUEPRINT". www.icsa.org.uk. Retrieved 29 September 2019.
  17. "Diligent Acquires Brainloop to Expand Governance Cloud Offering | Diligent". Diligent - English US. Retrieved 29 September 2019.
  18. "Exclusive: Diligent acquires Manzama". legaltechnology.com. Retrieved 23 February 2020.
  19. "Home". Diligent Institute. Retrieved 29 September 2019.
  20. "Diligent Launches First Global Governance Think-Tank with Diligent Institute". www.businesswire.com. 5 December 2018. Retrieved 29 September 2019.
  21. "AIC Members Join Diligent's Modern Leadership Initiative To Improve Board Diversity At Private Equity-Backed Businesses". American Investment Council. 1 October 2020. Retrieved 30 December 2020.
  22. Kreutzer, Laura (6 July 2020). "Diligent's Brian Stafford Says Diverse Leadership Starts With Boards". Wall Street Journal. ISSN 0099-9660. Retrieved 21 August 2020.
  23. "Modern Governance Requires Modern Leadership". diligent.com. Retrieved 21 August 2020.
  24. "About Diligent - the #1 Board Management Software Provider | Diligent". Diligent - English US. Retrieved 24 July 2019.
  25. Zaveri, Paayal. "A Salesforce exec who was once the 'wing woman' to former co-CEO Keith Block explains why she's leaving after 8 years to join a $4 billion corporate-governance firm". Business Insider. Retrieved 27 October 2020.
  26. "The $100M ARR club welcomes four new members". TechCrunch. Retrieved 23 February 2020.
  27. "Diligent Reaches New Milestone with $200 Million Annual Recurring Revenue (ARR) along with Investment from Clearlake Capital Group". www.businesswire.com. 9 February 2018. Retrieved 22 August 2019.
  28. "Clearlake Capital Group invests in Diligent Corporation". Private Equity Wire. 9 February 2018. Retrieved 22 August 2019.
  29. "Diligent Introduces Governance Cloud, the Most Comprehensive Suite of Governance Offerings Available in Today's Market". www.businesswire.com. 7 February 2018. Retrieved 3 September 2019.
  30. Giles, Martin (6 April 2020). "Free Software That Businesses, Schools And Others Can Use During The COVID-19 Crisis". Forbes. Retrieved 14 April 2020.
  31. "Deloitte's 2014 Technology Fast 500" (PDF).
  32. "Deliotte's 2016 Technology Fast 500" (PDF).
  33. "Deloitte's 2020 Technology Fast 500" (PDF).
  34. "Inc. 5000 2018: The Complete Rankings". www.inc.com. Retrieved 13 August 2019.
  35. "2019 Inc. 5000: The Most Successful Companies in America". Inc.com. 14 August 2019. Retrieved 23 February 2020.
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