Marketo gets scooped up into the private world for US$1.79 billion

Customers are worried because of the buyer's reputation, one analyst says

Marketing-software maker Marketo has agreed to be acquired by private equity firm Vista Equity Partners for US$1.79 billion, the company announced Tuesday.

Marketo shareholders will receive $35.25 in cash per share -- a sum the company says represents a 64 percent premium over its closing price earlier this month, before reports emerged that it was exploring strategic alternatives.

The deal is expected to close in the third quarter of 2016. Marketo's headquarters will remain in San Mateo, California, the company said.

"The acquisition will allow Marketo to continue to focus on customer success and to remain the independent category leader," said Phil Fernandez, Marketo's chairman and CEO.

Marketo's marketing-automation software is designed to help companies develop long-term relationships with their customers. Shares of the company's stock were up more than 9 percent on Tuesday.

Some Marketo customers are worried by the acquisition, according to Ray Wang, founder and principal analyst with Constellation Research.

"In the past, when Vista has made acquisitions like this, such as of Tibco, they've done weird things," Wang explained.

Asking employees to take "weird management tests" is one example, Wang said. "That's part of the process."

So, in addition to the talent loss that Marketo would have naturally experienced following its 2013 initial public offering (IPO), there will likely be "a little bit of an exodus" following this latest news, he predicted.

Private equity firms like Vista also "typically stretch out R&D investment," Wang said, pushing out deadlines on projects already under way. They often tend to reduce expenditures on sales and marketing as well, as a way of cutting costs.

"Pretty soon it's just about keeping a maintenance stream of customers and not really growing the market," he explained. "What most of our customers are worried about is the lack of innovation that could occur, especially given Vista's reputation."

That's not to say that there aren't potential upsides to the deal, however. Vista has already made numerous other acquisitions of related technologies, so "they could make some synergies here," said Cindy Zhou, a vice president and principal analyst with Constellation Research.

Vista owns a number of technology companies including workflow management vendors, Autotask and Aptean, advertising software player, Mediaocean, email optimisation vendor, Return Path, enterprise data management provider, Tibco, and telecoms software solutions company, Telarix.

Vista Equity Partners couldn't immediately be reached for comment.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

CMOs are talking the CX talk, but not yet walking the walk

Customer experience is eclipsing product as a competitive differentiator. CMOs are recognising this shift and talking the talk. But are they also walking the walk?

Will our manners go the same way as texting when robotic servants take over?

Much of the talk in the industry is focused on the limited amount of time that screens have left in our lives.

Katja Forbes

Founder and chief, sfyte

Social purpose: Oxygen for your brand health vitals

If trust is the new currency, then we’re in deep trouble. Here's why.

Carolyn Butler-Madden

Founder and CEO, Sunday Lunch

https://bit.ly/2t5z6fIView this brilliant service and then apply in your product marketing which will increase your sell ..

Sujay Patel

Why Gartner thinks brands are too uptight about strategy

Read more

The things who have mentioned are very convincing and will certainly work.

Lunna Walker

Xero evolves to fit a changing marketplace

Read more

The use of the virtual reality and the additional reality in marketing are only the first steps to the unlimited possibilities. When you ...

Viri VR

Treasury Wine Estates ramps up consumer engagement with augmented reality app portfolio

Read more

Personally, I know about using virtual reality in VR games or when watching movies. I live in Melbourne and often visit a club - https://...

Rafe Frost

3 brand new virtual reality experiences in action

Read more

Infographics are quick and easy to understand! Pictures indeed speak better than words. SEO in Mumbai

Tanushree

Image intelligence:10 must-see infographics for marketers

Read more

Latest Podcast

More podcasts

Sign in