"A mistake is simply another way of doing things."
Vista Equity Partners Takes Marketo Private
- Enterprise Value $1.6 Billion
- EV/LTM Revenue 6.9x
- Vista Equity Partners, a software and IT focused private equity firm, announced yesterday that it will acquire all shares of the marketing automation company Marketo (Nasdaq: MKTO) for $35.25 per share.
- Vista’s offer is a 64% premium over Marketo’s May 9th closing price (shares jumped on a news report that the company was considering a sale). It is a 9% premium to the stock’s Friday closing price.
- The company announced continued revenue growth in its latest earnings announcement in April, but it also operated at a loss (and expected to continue doing so going forward).
Securing A Presence in a Desirable Space
- Making Moves: This is Vista’s second major acquisition in the marketing space so far this year, having acquired event management company Cvent for $1.65 billion in April. Advertising and marketing technology is increasingly valuable as companies compete to monetize online users – Marketo and Cvent are the two largest US software take-private deals.
- An Unexpected Twist: Many observers expected a strategic buyer to absorb Marketo, with names like Microsoft appearing in the press as a potential acquirer as recently as Friday. As the company has shifted its aim from small and mid-market accounts to larger accounts, it risks increased completion with tech giants like Salesforce, Oracle, or Adobe.
- Disinterest in Tech Enables PE Play: The market has shied away from many technology stocks this year, especially those like Marketo operating at a loss. Consequently, Marketo shares lost almost half their value from the beginning of the year by mid-February. This, combined with Vista’s flush funding (the company is currently raising its sixth fund, with a cap of $10 billion) makes such large plays especially viable and strategic.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.