Court says Goldman Sachs can't escape $4 billion EngageSmart deal lawsuit

Goldman Sachs helped plan a $4 billion deal – then switched sides to advise the company being sold. A Delaware court said that was a problem. 

Here is what happened. EngageSmart, an electronic payments and billing company, went public in 2021 with private equity firm General Atlantic holding roughly 60 percent of the voting power. General Atlantic was, for all practical purposes, running the show. It controlled the board, set the agenda, and had the final say on most major decisions. 

By early 2022, General Atlantic needed to raise cash. The funds it used to hold its EngageSmart stake were approaching the end of their investment lifecycles, and the investors in those funds were pressing to get their money back. That pressure shaped much of what followed. The problem is that the other stockholders – the ordinary public investors – never knew about it. 

General Atlantic's longtime financial advisor was Goldman Sachs. When General Atlantic started working through what a sale of EngageSmart might look like, Goldman was in the room from the beginning — helping to model the transaction and explore deal structures for the controlling shareholder. Then, mid-process, Goldman switched. It stopped advising General Atlantic and became the company's financial advisor instead, in the same deal it had been helping to engineer. The board's special committee, which was supposed to be protecting minority investors, approved that arrangement without any recorded discussion of the conflict. 

If that sounds like something worth raising an eyebrow at, it gets more interesting. 

The buyer that ultimately won the deal was Vista Equity Partners. Throughout the process, Vista received access and courtesies that other potential buyers did not get. When Vista missed the first-round bidding deadline, Goldman told the committee's own advisor to wait for Vista before following up with anyone else. Goldman then privately told Vista that its bid should come in above $22.00 per share – a tip that no other bidder received. 

The deal that came out of all this was a $4 billion transaction. Vista acquired 65 percent of EngageSmart and paid public stockholders $23 per share. General Atlantic sold some of its shares at that same price, kept a 35 percent stake in the new company, and collected an additional $500 million dividend on top of everything else. That last part – the $500 million – was never disclosed to stockholders before they voted to approve the deal. 

That omission is what unraveled the legal protection the defendants were counting on. 

In Delaware, there is a framework that allows a controlling shareholder to structure a deal in a way that gives it some protection from lawsuits – as long as certain conditions are met, including that the stockholder vote is fully informed. The defendants argued they had followed that framework to the letter. The court, on February 27, 2026, disagreed. Vice Chancellor Laster found that leaving out General Atlantic's need for cash – and the $500 million payment – gave stockholders enough grounds to argue they were not fully informed when they voted. That finding knocked out the defendants' main legal defense. 

Goldman's role in the deal also remains in the case. The aiding and abetting claim against Goldman survived. The one against Vista did not. 

No one has been found liable yet. The case is heading to trial. But the court's ruling on February 27 draws a fairly clear line: if the people running a deal have strong financial reasons to get it done – and they keep those reasons from the investors who are being asked to vote – the legal safeguards they think are protecting them may not hold. 

For advisors and investment professionals, the message is straightforward. Conflicts of interest do not disappear because a committee signs off on them. And when the controlling party in a transaction walks away with half a billion dollars more than anyone told the other shareholders about, the courts are going to want to know why.