Marketo goes private with puzzling acquisition by Vista Equity Partnership
Update: Listen to analysts from Digital Clarity Group and Constellation Research in a recorded live webcast about the Marketo deal.
Well, they say timing is everything, and so it seems I was just a day off in my Marketing Automation Round-up post, in which I speculated on Marketo‘s impending acquisition. The cloud-based marketing automation platform (MAP) company was acquired today (May 31, 2016) for $1.79 billion in cash by Vista Equity Partners (Vista). The announcement, made by chief executive Phil Fernandez, marks a return to private ownership for Marketo, after being publicly traded since 2013.
The $1.79 b price tag, while higher than some might have expected and less than others thought, is not out of line with similar transactions, such as Oracle paying $1.5 billion for Responsys in 2013, and Salesforce’s $2.5 billion acquisition of ExactTarget in the same year.
As one of the last major independent marketing automation vendors, Marketo has been ripe for acquisition. It was just a matter of who and when, not if, in my opinion. But honestly, I am bit surprised that it was a private equity (PE) firm rather than one of the big tech vendors (IBM, SAP, Microsoft). With all that Marketo has going for it, the traditional PE play of “buy, fix, flip” — which Vista promotes on its homepage: “Vista’s investment process continually identifies specific companies that can be acquired and transformed through the implementation of the Vista SOPs” — doesn’t seem to fit. This might not bode well for Marketo’s recently announced Project Orion, its IoT (internet of things) re-platforming initiative.
Looking at Vista’s existing line up, I can see where some of its current workflow platform technologies might be able to help Marketo, but there doesn’t seem to be much in the way of similar tech to align or blend it with. Just last month Vista acquired CVent, a leading cloud-based enterprise event management company — but again, a weak link at best, if the plan is to build a portfolio of technology in the marketing space. So Marketo may just be the first big piece of a much larger martech puzzle Vista is planning to build as part of a longer term plan. I guess we will have to stay tuned and see.
From the Marketo camp, their claims that the deal was done in part to help propel the platform out of its small and mid-market account base are a bit mystifying. The company, which has always appealed more to larger, more complex businesses, had already formed an alliance with Accenture earlier this year to help get it into conversations with these targeted bigger clients. And certainly, an acquisition by SAP, Oracle, or Microsoft, would have amplified and accelerated the platform’s foray into those markets more so than a PE firm just starting down the marketing technology path.