Mergers and Acquisitions
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Vista acquires Gainsight for $1.1B, adding to its growing enterprise arsenal
Vista Equity Partners hasn’t been shy about scooping up enterprise companies over the years, and today it added to a growing portfolio with its purchase of Gainsight. The company’s software helps clients with customer success, meaning it helps create a positive customer experience when they interact with your brand, making them more likely to come back and recommend you to others. Sources pegged the price tag at $1.1 billion.
As you might expect, both parties are putting a happy face on the deal, talking about how they can work together to grow Gainsight further. Certainly, other companies like Ping Identity seem to have benefited from joining forces with Vista. Being part of a well-capitalized firm allowed them to make some strategic investments along the way to eventually going public last year.
Gainsight and Vista are certainly hoping for a similar outcome in this case. Monti Saroya, co-head of the Vista Flagship Fund and senior managing director at the firm, sees a company with a lot of potential that could expand and grow with help from Vista’s consulting arm, which helps portfolio companies with different aspects of their business like sales, marketing and operations.
“We are excited to partner with the Gainsight team in its next phase of growth, helping the company to expand the category it has created and deliver even more solutions that drive retention and growth to businesses across the globe,” Saroya said in a statement.
Gainsight CEO Nick Mehta likes the idea of being part of Vista’s portfolio of enterprise companies, many of whom are using his company’s products.
“We’ve known Vista for years, since 24 of their portfolio companies use Gainsight. We’ve seen Gainsight clients like JAMF and Ping Identity partner with Vista and then go public. We believe we are just getting started with customer success, so we wanted the right partner for the long term and we’re excited to work with Vista on the next phase of our journey,” Mehta told TechCrunch.
Brent Leary, principle analyst at CRM Essentials, who covers the sales and marketing space, says that it appears that Vista is piecing together a sales and marketing platform that it could flip or go public in a few years.
“It’s not only the power that’s in the platform, it’s also the money. And Vista seems to be piecing together an engagement platform based on the acquisitions of Gainsight, Pipedrive and even last year’s Acquia purchase. Vista isn’t afraid to spend big money, if they can make even bigger money in a couple years if they can make these pieces fit together,” Leary told TechCrunch.
While Gainsight exits as a unicorn, the deal might not have been the outcome it was looking for. The company raised more than $187 million, according to PitchBook data, though its fundraising had slowed in recent years. Gainsight raised $50 million in April of 2017 at a post-money valuation of $515 million, again per PitchBook. In July of 2018 it added $25 million to its coffers, and the final entry was a small debt investment raised in 2019.
It could be that the startup saw its growth slow down, leaving it somewhere between ready for new venture investment and profitability. That’s a gap that PE shops like Vista look for, write a check, shake up a company and hopefully exit at an elevated price.
Gainsight hired a new chief revenue officer last month, notably. Per Forbes, the company was on track to reach “about” $100 million ARR by the end of 2020, giving it a revenue multiple of around 11x in the deal. That’s under current market norms, which could imply that Gainsight had either lower gross margins than comparable companies, or as previously noted, that its growth had slowed.
A $1.1 billion exit is never something to bemoan — and every startup wants to become a unicorn — but Gainsight and Mehta are well known, and we were hoping for the details only an S-1 could deliver. Perhaps one day with Vista’s help that could happen.
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As Slack acquisition rumors swirl, a look at Salesforce’s six biggest deals
The rumors ignited last Thursday that Salesforce had interest in Slack. This morning, CNBC is reporting the deal is all but done and will be announced tomorrow. Chances are this is going to a big number, but this won’t be Salesforce’s first big acquisition. We thought it would be useful in light of these rumors to look back at the company’s biggest deals.
Salesforce has already surpassed $20 billion in annual revenue, and the company has a history of making a lot of deals to fill in the road map and give it more market lift as it searches for ever more revenue.
The biggest deal so far was the $15.7 billion Tableau acquisition last year. The deal gave Salesforce a missing data visualization component and a company with a huge existing market to feed the revenue beast. In an interview in August with TechCrunch, Salesforce president and chief operating officer Bret Taylor (who came to the company in the $750 million Quip deal in 2016), sees Tableau as a key part of the company’s growing success:
“Tableau is so strategic, both from a revenue and also from a technology strategy perspective,” he said. That’s because as companies make the shift to digital, it becomes more important than ever to help them visualize and understand that data in order to understand their customers’ requirements better.
Next on the Salesforce acquisition hit parade was the $6.5 billion MuleSoft acquisition in 2018. MuleSoft gave Salesforce access to something it didn’t have as an enterprise SaaS company — data locked in silos across the company, even in on-prem applications. The CRM giant could leverage MuleSoft to access data wherever it lived, and when you put the two mega deals together, you could see how you could visualize that data and also give more fuel to its Einstein intelligence layer.
In 2016, the company spent $2.8 billion on Demandware to make a big splash in e-commerce, a component of the platform that has grown in importance during the pandemic when companies large and small have been forced to move their businesses online. The company was incorporated into the Salesforce behemoth and became known as Commerce Cloud.
In 2013, the company made its first billion-dollar acquisition when it bought ExactTarget for $2.5 billion. This represented the first foray into what would become the Marketing Cloud. The purchase gave the company entrée into the targeted email marketing business, which again would grow increasingly in importance in 2020 when communicating with customers became crucial during the pandemic.
Last year, just days after closing the MuleSoft acquisition, Salesforce opened its wallet one more time and paid $1.35 billion for ClickSoftware. This one was a nod to the company’s Service cloud, which encompasses both customer service and field service. This acquisition was about the latter, and giving the company access to a bigger body of field service customers.
The final billion-dollar deal (until we hear about Slack perhaps) is the $1.33 billion Vlocity acquisition earlier this year. This one was a gift for the core CRM product. Vlocity gave Salesforce several vertical businesses built on the Salesforce platform and was a natural fit for the company. Using Vlocity’s platform, Salesforce could (and did) continue to build on these vertical markets giving it more ammo to sell into specialized markets.
While we can’t know for sure if the Slack deal will happen, it sure feels like it will, and chances are this deal will be even larger than Tableau as the Salesforce acquisition machine keeps chugging along.
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Snap acquired Voisey, an app to create music tracks overlaying your own vocals
Snapchat helped pioneer the use of lenses on faces in photos and videos to turn ordinary picture messages into fantastical creations where humans can look like, say, cats, and even cats can wear festival-chic flower crowns. Now it sounds like the company might be turning its attention… to sound.
The company appears to have acquired Voisey, a U.K. startup that features instrumentals that you overlay with your own voice to create short music tracks (and videos), and also lets musicians upload instrumentals that become the basis for those tracks. Users can apply audio filters (like auto-tune, automated harmonies and some funny twists like a Billie-Eilish-ish effect) to their voices; and they can browse and view other people’s Voisey tracks.
The results look something like this or this.
The deal was first reported by Business Insider, which noted Voisey had changed its company address in London to that of Snap’s. In addition to that, we have seen that filings in Companies House indicate that the the four people who co-founded the startup — Dag Langfoss-Håland, Pal Wagtskjold-Myran, Erlend Drevdal Hausken and Oliver Barnes — as well as the startup’s first two investors — Terry Steven Fisher and Jason Lee Brook — all resigned as directors of the company on October 21. At the same time, two employees at Snap — Atul Manilal Porwal on the legal team and international controller Amanda Louise Reid — were assigned directorship roles.
Snap’s London spokesperson Tanya Ridd said Snap declined to comment for this story. Voisey did not respond to our email.
Voisey had raised only $1.88 million to date (per PitchBook data), and it’s ranked at 143 in iOS in Music in the U.S. currently, according to AppAnnie stats. It’s not clear how much Snap would have paid for the startup, but the news comes on the heels of a Snap filing earlier this month that indicated that the U.K. entity, which is still loss-making, is poised to borrow up to $500 million, so there is possibly some cash for acquisitions reserved as part of that.
Voisey has been described in the past as a “TikTok for music creation”. And it does look a little like the popular video app, which like Voisey is also focused around user-generated content. Voisey has a distinctly stronger creator feel to it, and there has even been at least one singer discovered on the platform. The Billie Eilish-esque Olivia Knight, who goes by “poutyface,” signed with Island Records/Warner Chappell earlier this year.
On the other hand, TikTok — at least for now — is less about music creation and more about people creating other kinds of content — dancing, written messages, chitchat — set to music. We write “for now” because TikTok’s parent ByteDance has also quietly acquired assets for music creation, so maybe we should watch this space.
It’s not clear whether Snap would look to integrate some or all of Voisey’s features into its flagship app Snapchat to create new music services, or run Voisey as a separate app (with easy hooks into Snapchat), or a combination of the two. Based on experience it could be any of these.
Snap has been slowly building up its music cred, but up to now that has felt more like work to clone TikTok: last month, it launched Sounds on Snapchat, a feature to let people add tunes to their Stories, to make them, well, more like TikTok videos. That has come with a growing trove of licensing deals with big publishers.
Even before it launched that, Snap hadn’t ignored the power of sound completely. It has been offering voice filters, to give your videos a more comedic twist, for years already. But with music being one of the most engaging of formats on social media, Voisey could potentially give Snap, and Snapchat, a leg up in the feature race with a platform to build original content.
What’s interesting is the timing of this deal.
It was just last week that we revealed another voice-focused acquisition of Snap’s, the Israeli startup Voca.ai, which it acquired for $70 million (although a close source disputed that and said it’s $120 million…).
As with Voisey, no word on where Voca.ai tech will be used, but Voca.ai is an AI-based startup that lets companies create interactive voice-based chatbots for customer service interactions. That could see Snap expanding the kinds of services it provides to businesses, or expanding how people can interact using voice on its existing services, specifically its Spectacles, or both (or, again, something completely different).
Put together with the Voisey deal, it’s a sign of the company doing a lot more than just snapping pictures.
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Onit acquires legal startup McCarthyFinch to inject AI into legal workflows
Onit, a workflow software company based in Houston, announced this week that it has acquired 2018 TechCrunch Disrupt Battlefield alum McCarthyFinch. Onit intends to use the startup’s AI skills to beef up its legal workflow software offerings.
The companies did not share the purchase price.
After evaluating a number of companies in the space, Onit focused on McCarthyFinch, which gives it an artificial intelligence component the company’s legal workflow software had been lacking. “We evaluated about a dozen companies in the AI space and dug in deep on six of them. McCarthyFinch stood out from the pack. They had the strongest technology and the strongest team,” Eric M. Elfman, CEO and co-founder of Onit told TechCrunch.
The company intends to inject that AI into its existing Aptitude workflow platform. “Part of what really got me excited about McCarthyFinch was the very first conversation I had with their CEO, Nick Whitehouse. They considered themselves an AI platform, which complemented our approach and our workflow automation platform, Aptitude,” Elfman said.
McCarthyFinch CEO and co-founder Whitehouse says the startup was considering whether to raise more money or look at being acquired earlier this year when Onit made its interest known. At first, he wasn’t really interested in being acquired and was hoping to go the partner route, but over time that changed.
“I was very much on the partner track, and was probably quite dismissive to begin with because I was quite focused on that partner strategy. But as we talked, all egos aside, it just made sense [to move to acquisition talks],” Whitehouse said.
The talks heated up in May and the deal officially closed last week. With Onit headquartered in Houston and McCarthyFinch in New Zealand the negotiations and meetings all happened on Zoom. The two companies’ principals have never met in person. The plan is for McCarthyFinch to stay in place, even after the pandemic ends. Whitehouse expects to make a trip to Houston whenever it is safe to do so.
Whitehouse says his experience with Battlefield has had a huge influence on him. “Just the insights that we got through Battlefield, the coaching that we got, those things have stuck with me and they’ll stick with me for the rest of my life,” he said.
The company had 45 customers and 17 employees at the time of the acquisition. It raised US$5 million along the way. Now it becomes part of Onit as the journey continues.
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FireEye acquires Respond Software for $186M, announces $400M investment
The security sector is ever frothy and acquisitive. Just last week Palo Alto Networks grabbed Expanse for $800 million. Today it was FireEye’s turn, snagging Respond Software, a company that helps customers investigate and understand security incidents, while reducing the need for highly trained (and scarce) security analysts. The deal has closed, according to the company.
FireEye had its eye on Respond’s Analyst product, which it plans to fold into its Mandiant Solutions platform. Like many companies today, FireEye is focused on using machine learning to help bolster its solutions and bring a level of automation to sorting through the data, finding real issues and weeding out false positives. The acquisition gives them a quick influx of machine learning-fueled software.
FireEye sees a product that can help add speed to its existing tooling. “With Mandiant’s position on the front lines, we know what to look for in an attack, and Respond’s cloud-based machine learning productizes our expertise to deliver faster outcomes and protect more customers,” Kevin Mandia, FireEye CEO said in a statement announcing the deal.
Mike Armistead, CEO at Respond, wrote in a company blog post that today’s acquisition marks the end of a four-year journey for the startup, but it believes it has landed in a good home with FireEye. “We are proud to announce that after many months of discussion, we are becoming part of the Mandiant Solutions portfolio, a solution organization inside FireEye,” Armistead wrote.
While FireEye was at it, it also announced a $400 million investment from Blackstone Tactical Opportunities fund and ClearSky (an investor in Respond), giving the public company a new influx of cash to make additional moves like the acquisition it made today.
It didn’t come cheap. “Under the terms of its investment, Blackstone and ClearSky will purchase $400 million in shares of a newly designated 4.5% Series A Convertible Preferred Stock of FireEye (the ‘Series A Preferred’), with a purchase price of $1,000 per share. The Series A Preferred will be convertible into shares of FireEye’s common stock at a conversion price of $18.00 per share,” the company explained in a statement. The stock closed at $14.24 today.
Respond, which was founded in 2016, raised $32 million, including a $12 million Series A in 2017 led by CRV and Foundation Capital and a $20 million Series B led by ClearSky last year, according to Crunchbase data.
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The DOJ has approved Mastercard’s acquisition of Finicity
Federal regulators have approved Mastercard’s acquisition of Salt Lake City-based startup Finicity, which provides open-banking APIs. The deal is expected to go for $825 million.
“We were notified that the Department of Justice completed its review of our planned acquisition of Finicity and has cleared it to move forward,” Mastercard wrote in a statement. “We are pleased to have reached this milestone.”
Finicity allows users to be able to decide how their financial information is shared and who can make money decisions on their behalf through open APIs. The buy will allow Mastercard to offer consumers and businesses more choice in these transactions, without requiring them to do heavy lifting themselves.
Finicity, according to Crunchbase, has raised nearly $80 million in known venture capital as a private company. When closed, it will be one of the largest fintech acquisitions at nearly $1 billion in 2020.
The DOJ approval comes just two weeks after the body filed an antitrust lawsuit challenging Visa’s proposed $5.3 billion buy of Plaid. Plaid, which empowers a large chunk of financial services through its data network, including Venmo and Acorns, is being accused of making Visa a monopoly in online debt services.
Plaid has denied these claims, saying that “Visa intends to defend the transaction vigorously.” The feds are also looking into Intuit’s $7 billion proposed buy of Credit Karma, which was first announced in February 2020.
The approval of the Mastercard-Finicity transaction could be a shot in the arm for fintech startup valuations. After both the Plaid and Credit Karma deals came under increasing regulatory scrutiny, it was an open questions whether big-dollar M&A was going to be an option for fintech unicorns.
If the path was closed due to regulatory concerns, fintech startups would have to either pursue earlier, smaller sales themselves, or wait for an eventual IPO. If that was the case, venture capitalists might shun putting as much capital to work in the sector. However, the Finicity approval makes it clear that not all fintech M&A worth $500 million or more is going to encounter oversight headaches. That should be welcome news for late-stage fintech valuations.
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Palo Alto Networks to acquire Expanse in deal worth $800M
Palo Alto Networks has been on a buying binge for the last couple of years, and today it added to its haul, announcing a deal to acquire Expanse for $800 million in cash and equity awards. The deal breaks down to $670 million in cash and stock and another $130 million in equity awards to Expanse employees.
Expanse provides a service to help companies understand and protect their attack surface, where they could be most vulnerable to attack. It works by giving the security team a view of how the company’s security profile could look to an attacker trying to gain access.
The plan is to fold Expanse into Palo Alto’s Cortex Suite, an AI-driven set of tools designed to detect and prevent attacks in an automated way. Expanse should provide Palo Alto with a highly valuable set of data to help feed the AI models.
“By integrating Expanse’s attack surface management capabilities into Cortex after closing, we will be able to offer the first solution that combines the outside view of an organization’s attack surface with an inside view to proactively address all security threats,” Palo Alto Networks chairman and CEO Nikesh Arora said in a statement.
Expanse sees the acquisition as a way to accelerate the company road map using the resources of a larger company like Palo Alto, a typical argument from companies being acquired. “Joining forces with Palo Alto Networks will let us achieve our most important business goals years ahead of schedule. During the course of conversations with Palo Alto Networks leadership, we shared optimism that the right combination of technology and people can solve many cybersecurity challenges that to date have seemed intractable,” the startup’s founders wrote in a blog post announcing the deal.
The two co-founders, Dr. Tim Junio and Dr. Matt Kraning, will be joining Palo Alto under the terms of the deal, which is expected to close in Palo Alto’s fiscal second quarter, assuming it passes regulatory muster.
Expanse was founded in 2012 and has raised $136 million, according to Crunchbase data. Its most recent raise was a $70 million Series C last year, which was led by TPG.
Today’s acquisition is Palo Alto’s third in 2020 and the 10th since 2018. Palo Alto stock was up 2.15% in early trading.
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Adobe acquires marketing workflow startup Workfront for $1.5B
Adobe just announced that it is acquiring marketing workflow management startup Workfront for $1.5 billion. Bloomberg first reported the sale earlier today.
Workfront was founded back in 2001, making it a bit long in the tooth for a private company that has raised $375 million, according to Crunchbase. (It’s worth noting that $280 million of that was secondary money raised last year.)
The acquisition gives Adobe more online marketing tooling to fit into its Experience Cloud. This one helps companies manage complex projects inside the marketing department (or elsewhere in the company, for that matter).
Suresh Vittal, VP of platform and product for Adobe Experience Cloud, said that the two companies often work together and encounter one another’s sales teams. As the pandemic has played out, it began to make more sense to bring in-house this kind of tooling that works well in a distributed environment, and over the last several months the deal came together.
“The new normal distributed marketing team, distributed experience delivery teams, people having to work remotely — we started to see new use cases emerge around the idea of work management, around the idea of content velocity, around the idea of providing compliance and governance capabilities so no asset escapes the organization, and it goes through this process of passing through creative and the marketing teams and getting out there and really representing your brand in the right way,” Vittal explained.
Workfront CEO Alex Shootman sees the deal as a way to accelerate the roadmap while working with a much larger company. “We are barely scratching the surface of marketing and we could grow tremendously, just by having that great kind of integrated relationship,” he said.
Holger Mueller, an analyst at Constellation Research, says the acquisition will help Adobe customers manage the complexities of marketing project management. “Scheduling and managing work had gotten orders of magnitude more complex for enterprises, and Adobe is accounting for that with the acquisition of Workfront, providing better tool support for the new future of work,” Mueller told TechCrunch.
Workfront’s 960 employees will become part of Adobe and become part of the Adobe Experience Cloud. Shootman will continue to run it and report to Anil Chakravarthy, executive vice president and general manager of the digital experience business at Adobe.
Workfront’s customers include Home Depot, T-Mobile and Deloitte, and the two companies share 1,000 common customers among Workfront’s 3,000 total customer base. In fact, it has APIs that connect to Adobe Creative Cloud and Experience Cloud, two parts of the company’s product family that marketers frequently access.
As Adobe battles Salesforce, SAP and Oracle in the marketing automation space, it’s been using its checkbook to acquire additional fire power in recent years. This acquisition comes after Adobe spent $1.6 billion for Magento and $4.75 billion for Marketo in 2018. That’s almost $8 billion for three companies in less than two years, even as it builds out parts of its Adobe Experience Cloud in-house. Combined, it shows just how serious the company is about making headway in this valuable area.
Customer experience has always been an essential element of online and in-person transactions, making sure the customer feels good about the interactions it has with a brand. It not only keeps them coming back, but it encourages them to act as ambassadors on behalf of a company, something that has incredible value.
Conversely, a bad experience can lead to the opposite impact, causing a prospective or even loyal customer to abandon a brand and speak badly about it to friends online and in person. Adobe hopes that by bringing another marketing tool into the fold, it can help its customers increase the likelihood of a positive online customer experience. This one should allow marketing personnel working at a company to move marketing projects through a workflow from idea to delivery.
The deal is expected to close in the first quarter of Adobe’s fiscal year. Per usual, it will be subject to typical regulatory scrutiny.
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Coupa Software snags Llamasoft for $1.5B to bring together spending and supply chain data
Coupa Software, a publicly traded company that helps large corporations manage spending, announced that it was buying Llamasoft, an 18-year-old Michigan company that helps large companies manage their supply chain. The deal was pegged at $1.5 billion.
This year Llamasoft released its latest tool, an AI-driven platform for managing supply chains intelligently. This capability in particular seemed to attract Coupa’s attention, as it was looking for a supply chain application to complement its spend management capabilities.
Coupa CEO and chairman Rob Bernshteyn says when you combine that supply chain data with Coupa’s spending data, it can produce a powerful combination.
“Llamasoft’s deep supply chain expertise and sophisticated data science and modeling capabilities, combined with the roughly $2 trillion of cumulative transactional spend data we have in Coupa, will empower businesses with the intelligence needed to pivot on a dime,” Bernshteyn said in a statement.
The purchase comes at a time when companies are focusing more and more on digitizing processes across enterprise, and when supply chains can be uncertain, depending on the location of COVID hotspots at any particular time.
“With demand uncertainty on one hand, and supply volatility on the other, companies are in need of supply chain technology that can help them assess alternatives and balance trade-offs to achieve desired business results. LLamasoft provides these capabilities with an AI-powered cloud platform that empowers companies to make smarter supply chain decisions, faster,” the company wrote in a statement.
Llamasoft was founded in 2002 in Ann Arbor, Michigan and has raised more than $56 million, according to Crunchbase data. Its largest raise was a $50 million Series B in 2015 led by Goldman Sachs .
The company generated more than $100 million in revenue and has 650 big customers, including Boeing, DHL, Kimberly-Clark and GM, according to company data.
Coupa has been extremely acquisitive over the years, buying 17 companies, according to Crunchbase data. This deal represents the fourth acquisition this year for the company. So far the stock market is not enamored with the acquisition; the company’s stock price is down 5.20% at publication.
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Twilio wraps $3.2B purchase of Segment after warp-speed courtship
It was barely a month ago we began hearing rumors that Twilio was interested in acquiring Segment. The $3.2 billion deal was officially announced three weeks ago, and this morning the communications API company announced that the deal had closed, astonishingly fast for an acquisition of this size.
While we can’t know for sure, the speed with which the deal closed could suggest that it was in the works longer than we had known, and when we began hearing rumors of the acquisition, it could have already been signed, sealed and delivered. In addition, the fact that Twilio CEO Jeff Lawson and Segment CEO Peter Reinhardt knew one another before coming to terms might have helped accelerate the process.
Regardless, the two companies are a nice fit. Both deal with the API economy, providing a set of tools to help developers easily add a particular set of functions to their applications. For Twilio, that’s a set of communications APIs, while Segment focuses on customer data.
When you pull the two sets of tooling together, and combine that with Twilio’s 2018 SendGrid acquisition, you can see the possibility to build more complete applications for interacting with customers at every level, including basic communications like video, SMS and audio from Twilio, as well as customer data from Segment and customized emails and ads based on those interactions from SendGrid.
As companies increasingly focus on digital engagement, especially in the midst of a pandemic, Twilio’s Lawson believes the biggest roadblock to this type of engagement has been that data has been locked in silos, precisely the kind of problem that Segment has been attacking.
“With the addition of Segment, Twilio’s Customer Engagement Platform now enables companies to both understand their customer and engage with them digitally — the combination is key to building great digital experiences,” Lawson said in a statement.
In a recent post looking at the reasoning behind the deal, Brent Leary, founder and principal analyst at CRM Essentials, saw it this way: “This move allows Twilio to impact the data-insight-interaction-experience transformation process by removing friction from developers using their platform,” Leary explained.
With the deal closed, Segment will become a division of Twilio. Reinhardt will continue to be CEO, and will report directly to Lawson.
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