Independent ad server, Sizmek, files for Chapter 11 Bankruptcy

Adtech giant's slowing revenue and inability to find fresh investment see company filing to bankruptcy protection

Ad server adtech player, Sizmek, has filed for Chapter 11 bankruptcy as its continues to try and overcome its financial woes in the midst of adtech consolidation.

The company’s board of directors confirmed it along with seven affiliated debtors had initiated Chapter 11 proceedings in the US Bankruptcy Court, a moved taken to preserve company value while it looks to find alternative business funding arrangements. The group includes X Plus One and Two Solutions, Point Roll, Wireless Artist and WirelessDeveloper.

“The company is aggressively seeking to access its existing cash, and intends to fully resume normal course operations as soon as possible,” it said in a statement.

The company is claiming debtor’s aggregate debt is just over $2.5 million and estimated both assets and liabilities to be worth at least $100 million. Its top five creditors among a list of 60 unsecured claims are Index Exchange ($8.9m), PubMatic ($7.3m), OpenX Technologies ($5.9m), AppNexus ($5.2m) and Google ($4.5m). The company estimates between 1000 and 5000 creditors in total.

Sizmek is one of a number of adtech companies to be acquired by private equity – this time Vector Capital – which picked up the business in August 2016 in a deal worth US$122 million. Yet according to a report in AdExchanger, Vector has been unwilling to front up further cash to support Sizmek’s business model. This, combined with softer revenues, has led to the Chapter 11 decision.

“In the months preceding the filing, Sizmek has been in extended discussions with its stakeholders regarding their continued support of the company as its pursued various strategic alternatives to address its over-leveraged balance sheet,” the company stated.

“Despite these ongoing discussion, the company’s primary lender took control of the company’s bank accounts and sought to diver customer receivables, therefore cutting off access to capital.”

Sizmek has been a high-profile player in the rapid rise and proliferation of adtech solutions, securing millions in investment and making a number of significant acquisitions to bolster its position in what’s been a highly tumultuous space. The most notable of such acquisitions was the US$145 million purchase of Rocket Fuel, rounding out its programmatic advertising suite capabilities.

Previous acquisitions included mobile DSP, StrikeAd, for US$11.7 million, as well as PointRoll for US$20m, a multi-screen digital adtech and services company  that produced technology for customising ads based on inventory, demographics and location.

Yet a report posted on AdExchanger in early March suggested Sizmek required another investment round after facing setbacks and revenue shortfalls in the past year. The report claimed the directors had been unable to get the funding from Vector Capital, and suggested Sizmek was now working with Cerberus Capital Management, which financed the debt to secure the Rocket Fuel deal, for find another investor.

In a statement on its website to customers, the company stressed it remained open for open for business and would be looking to a number of options to continue that way. Top of the list now looks like a sale. Sizmek’s competitive landscape includes Google, Celtra, Flashtalking, Adform and Adobe Media Optimizer.

“The US Chapter 11 process – unlike bankruptcy schemes in other geographies – is specifically designed for companies like ours to operate as usual while working to resolve financial issues,” it stated.

“Sizmek’s Board and management team continue to explore all available options, including a potential sale of our business.”

In its recent magic quadrant for adtech solutions, Gartner placed Sizmek in the ‘visionary’ quadrant, noting the vendor’s strengths included workflow efficiency, performance marketing excellence and the ability to serve the SMB market but also its lower level ability to execute. Weaknesses included the fact that the DSP product had recently been overhauled, product reliability and below-par technical support.

Gartner’s definition of adtech is platforms that can manage advertisements across channels and offer functions such as targeting, campaign design, bid-management analysis, optimisation and automation of digital advertising.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu       

 

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

Why defining brand strategy is vital to capitalising on quick wins

Big brands were once protected from small brands by high barriers to entry. Big brands had the resources to employ big agencies, to crack big ideas and to invest in big campaigns. They had the luxury of time to debate strategies and work on long-term innovation pipelines. Retailers used to partner with big brands.

Troy McKinnna

Co-founder, Agents of Spring, Calm & Stormy

3 ways to leverage the talents of your team to avoid disruption

​According to the World Economic Forum in its most recent The Future of Jobs report, the most important skills for the future are not technical, task-oriented skills, but higher-order skills such as creativity, social influence, active learning, and analytical thinking.

Gihan Perera

Futurist, leadership consultant

CMOs, it’s time to stop squandering customer attention

Businesses continue to highly value the attention they buy through paid media, yet at the same time, many continue to disregard and under-value opportunities to connect with customers using their owned media.

Well written Vanessa!! Agreed with your view that human experience is marketing's next frontier. Those businesses who are focused on the ...

Clyde Griffith

Forget customer experience, human experience is marketing's next frontier

Read more

Great tips for tops skills need to develop and stay competitive

Nick

The top skills needed to stay competitive in a rapidly changing workforce

Read more

The popularity of loyalty programs is diminishing, though I'd say it is because customers are savvy enough to recognise when a loyalty pr...

Heather

It’s time for marketers to rethink their approach to ‘loyalty’

Read more

Thanks Nadia for sharing this blog. It has really useful and amazing information about Salesforce Commerce Cloud and digital engagement w...

Holly Smith

Adidas taps data and technology smarts to build personalised digital engagement with consumers

Read more

clearly someone who's jealous and only comments from the safety of being behind their keyboard

Peter Sibson

The purpose of purpose - Brand science - CMO Australia

Read more

Latest Podcast

More podcasts

Sign in