M&A

Marketo Acquisition Is Complete – What Now?

Marketo Acquisition

For the past decade, Marketo has been the go-to software for marketing professionals, helping to revolutionize the world of digital marketing through products such as Marketo Revenue Cycle Analytics, and the LaunchPoint app, which help marketing managers learn more about their target customer base, and keep up with the latest browsing trends.

On 17 May 2013, Marketo went public on the NASDAQ stock exchange, with a market capitalization of approximately $724m. By the end of its first day of trading, stocks had risen by more than 50 per cent of their offering price, as buyers flocked to get a piece of this rising star of the tech world.

But just three years later, the company went private once again, following a high-profile acquisition by the American private equity firm Vista Equity Partners, valuing Marketo at a massive $1.79bn – more than twice its IPO value. Under the terms of the deal, each shareholder received a cash payment of $35.32 per share – a 64 per cent bump on the firm’s 9 May closing price – resulting in a huge payday for Marketo management. But CEO Phil Fernandez was quick to state that the deal was not solely driven by dollar signs.

“After careful consideration and deliberation, our Board of Directors unanimously concluded that the sale of Marketo to Vista Equity Partners was in the best interest of Marketo and its shareholders,” he said. “The acquisition will allow Marketo to continue to focus on customer success and to remain the independent category leader, continuing to set the agenda for product innovation and thought leadership for the entire digital marketing industry. It will also enable us to successfully deliver on the bold vision we recently set forth – to give tomorrow’s marketers and the C-suite an ultra-high-scale enterprise platform for customer engagement.”

Fernandez has been true to his word thus far, staying on as CEO and championing the release of a new suite of marketing tools just weeks after the acquisition.

So what now?

For a start, as investors will already be aware, the company can no longer trade as a public company and its NASDAQ listing was suspended on 16 August, the day the acquisition was completed. Vista now owns 100 per cent of Marketo, although it is known for taking a relatively ‘hands-off’ approach to its acquired companies, preferring to simply maintain the existing managerial structures and invest in new growth opportunities.

Vista’s portfolio includes a range of technology and software companies, many of which complement Marketo’s own work. For instance, Mediaocean (acquired by Vista in June 2015), facilitates more than $130bn in advertising spending each year, while TIBCO Software (acquired in September 2014) provides cutting-edge analytics in cloud computing.

“We see significant value in Marketo’s ability to enable organisations to increase digital intimacy and lifetime value with their customers and consumers leveraging the Marketo Marketing Platform,” said Brian Sheth, co-founder and president of Vista. “We are aligned with Marketo’s vision to lead the market in digital marketing transformation, and we’re thrilled to work with the management team to help Marketo reach its full potential.”

This “full potential” may include a new focus on event management – Marketo’s vast customer base and brand recognition would give it an instant leg-up in this lucrative sector, particularly when paired with the eventing expertise of Vista stablemates Lanyon, Active Network, and TIBCO. Or it could involve a foray into the world of mobile technology, an increasingly important revenue stream for marketing professionals. It is no coincidence that Marketo’s first post-acquisition products include an SMS solution and ‘program tokens’ which use QR codes and API-testing for mobiles. Alternatively, Vista may wish to simply expand Marketo’s reach into non-US markets. In early September, the company hired tech veteran Bill Binch in the newly-created role of managing director for Australia and New Zealand, where he will be tasked with growing the company’s regional presence.

One thing is certain – Marketo is not likely to go public ever again. Vista has a long track record of holding on to its investments, and in 16 years of operation, it has only sold two of its companies (BigMachines, which was sold to Oracle in late 2013, and Microedge, which was sold to Blackbaud in September 2014). With a remit to invest in high-growth companies in the innovative tech sector, the chances are that Vista has big plans for Marketo. We will all just have to wait and see what they are.

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