STG Group, Inc. (OTCPK:STGG) entered into a definitive merger agreement to acquire Preferred Systems Solutions, Inc. from PSS PE I, L.P., PSS Co-Investors, L.P., WWC Capital Fund II, L.P., managed by Outcome Capital, LLC, Spring Capital Partners II, L.P., managed by Spring Capital Partners, L.P. and Scott Goss for approximately $120 million on February 18, 2017. The merger consideration is subject to adjustment. STG Group intends to fund the purchase price with a combination of debt and equity financing. In case of termination either party is liable to pay a fee of $0.63 million. The parties to the agreement will deposit $1 million of the merger consideration in escrow to secure payment of any post-closing working capital adjustments in favor of STG Group. In addition, the merger agreement includes customary indemnification obligations and requires the parties to deposit $2 million of the merger consideration in escrow to secure the indemnification obligations of the stockholders of Preferred Systems Solutions thereunder. As on May 8, 2017, STG Group, Inc. (OTCPK:STGG) entered into an amendment and waiver to the definitive merger agreement to make following changes for the transaction: a) The outside date for closing the acquisition was extended to June 30, 2017; b) The purchase price under the merger agreement was increased to $119.8 million, subject to certain adjustments based upon closing working capital; c) The STG’s obligations to close were made subject to STG obtaining debt and equity financing for closing the acquisition; and d) The company agreed to make an advance payment of $925,000 of the merger consideration on the date of the amendment, which will be credited against the purchase price at closing. Preferred Systems Solutions is entitled to keep the advance payment if the merger agreement is terminated by STG Group, Inc. The deal is subject to customary closing conditions, including receipt of certain required third party consents, approval of the stockholders of Preferred Systems Solutions, written confirmation by the Committee on Foreign Investment in the United States that it has completed its review and determined that there are no unresolved national security concerns with respect to the merger and expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other regulatory approvals. The transaction has been approved by the shareholders of Preferred Systems Solutions. The transaction is expected to close during the first quarter of 2017. Morrison & Foerster LLP acted as the legal advisor to STG Group, Inc. and Sagent Advisors, LLC acted as the financial advisor and rendered a fairness opinion to the Board of Directors of STG in connection with the acquisition. Rees, Broome & Diaz, P.C. acted as the legal advisor for Preferred Systems Solutions in the transaction. Stephen Besen and Lara Aryani of Shearman & Sterling LLP acted as legal advisors to Sagent. STG Group, Inc. (OTCPK:STGG) cancelled the acquisition of Preferred Systems Solutions, Inc. from PSS PE I, L.P., PSS Co-Investors, L.P., WWC Capital Fund II, L.P., managed by Outcome Capital, LLC, Spring Capital Partners II, L.P., managed by Spring Capital Partners, L.P. and Scott Goss on July 1, 2017. In connection with the termination, PSS retained the $0.93 million advance payment paid to PSS by STG Group on May 8, 2017.