As programmatic advertising continues to grow rapidly in the US, we all wonder what big announcement will hit the headlines next. James Hercher of @AdExchanger shares intriguing insights with us regarding recent PE investments, in addition to why ‘timing’ in #adtech is truly paramount:
“When Adobe acquired the B2B marketing company Marketo for $4.8 billion last week, investors pressed CEO Shantanu Narayen to explain the gulf between Adobe’s price tag and Wall Street’s valuation of Marketo two years ago, when Vista Equity Partners snapped it off the stock market for $1.8 billion.
Private equity investors have shown they have ‘the dry powder and the patience’ to take subscription-based marketing technology companies off the market and resell them at strategic premiums, said Elgin Thompson, managing partner of Digital Capital Advisors.
Wall Street may have been confounded by Adobe’s Marketo deal, but private equity investors see it as a sign of what’s to come. And the private equity firms that bought companies like Neustar, Sizmek and Dun & Bradstreet are all betting that marketing technology companies with subscription revenue models can sell at higher multiples than Wall Street thinks.
Marketo was trading below $1 billion in 2016 before rumors of a takeover pushed it back into unicorn territory.
‘The intrinsic value of the business was more than Wall Street said it was,’ said Jason Holmes, president and COO of the sales and marketing platform Showpad and former COO of Marketo when Vista acquired the company.
Many in the industry scorn private equity takeovers because they often cut headcount and relocate businesses from tech hubs like New York City or San Francisco to cheaper cities, Holmes said.
‘It’s a formulaic process, but based on data and they get results,’ he said…”CONTINUE READING