Robert F. Smith’s Letter to Investors

Robert F. Smith and the PPP Program

Dear Investor,

I want to address with you the resolution of my tax matter with the Department of Justice.

I have entered into a settlement with the Department of Justice called a non-prosecution agreement, or NPA. This agreement resolves all aspects of what was a personal tax matter.

No Vista Equity Partners entity is part of the settlement and the Department of Justice never claimed that Vista or any Vista funds were involved or under investigation. Importantly, the Department of Justice has never suggested that any Vista client money was misapplied, misused, or diverted. All of our funds are audited by Deloitte and there has never been any issue raised with respect to the accounting of our investors’ money. Your money has always been safe and invested appropriately.

Since first learning about the Department of Justice’s investigation, I have cooperated fully for the last four and one-half years and have provided all relevant information to them. Recently, the Department of Justice offered to resolve this matter with me. I decided that the best thing for Vista, including its employees and our investors, my family and me, was to resolve the matter by entering into the NPA. Under the NPA, I have admitted my culpability, I will pay full restitution to the government, and I have agreed to continue cooperating with their broader investigation of a larger tax matter. I will fully comply with the terms of the NPA, and by doing so the Government will not prosecute me. This resolution allows me to fully move forward and put this matter behind me.

The essence of this case involves an offshore structure I created twenty years ago at the insistence of my only investor in my first private equity fund. The taxes at issue arose from a portion of the carry from that first fund that was directed to this structure in accordance with the terms of the limited partnership agreement. I was always entitled to the full amount of that carry—I did not get any extra carry or take money that should have gone to an investor. Although I have paid significant amounts of federal income tax during my lifetime, I should have paid taxes on the carried interest that was distributed to the offshore structure, and I did not.

Ultimately, I donated the funds in that offshore structure to Fund II Foundation, a U.S. 501(c)(3) charity, which has made significant contributions to support initiatives such as UNCF’s STEM scholarships for minority students, Susan G. Komen’s racial disparities breast cancer work, the National Parks Foundation’s preservation of Martin Luther King, Jr.’s birth and family homes, and the recently-announced Student Freedom Initiative to ease the burden of debt for students at Historically Black Colleges and Universities (HBCUs). As part of my resolution with the Government, I am not receiving any deduction or other tax benefit with respect to such donation.

The decision made twenty years ago has regrettably led to this turmoil, which has put undue stress and burden on too many. I should never have put myself in this situation, and more importantly, I apologize for any issues or concerns that this may have caused for you.

We have built an amazing business, comprising over 450 employees, one that has been, and remains, focused on generating strong returns for our investors in a wise and prudent manner, achieved in partnership with our portfolio companies. This is a result of the determination and resolve that you have grown to count on and should expect into the future.I have appreciated your support now and over these many years. I am relieved that this has been fully resolved and is now behind me. Though this has been a humbling experience for me, I am strengthened by great passion and purpose for the work I get to do and for the firm I get to lead. I am as committed as ever to moving forward as a CEO, an investor, a community leader, and a philanthropist – in order to continue to be a productive person trying to leave the world better than I found it.

Should you require further information on this matter, please contact me and we will be happy to provide any additional requested information.

With gratitude,
Robert