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

Sustainability trends brands can expect in 2020

​Marketers have made strides this year in sustainability with the number of brands rallying behind the Not Business As Usual alliance for action against climate change being a sign of the times. While sustainability efforts have gained momentum this year, 2020 is shaping up to be the year brands are really held accountable for their work in this area.

Ben King

CSR manager & sustainability expert, Finder

The trouble with Scotty from Marketing

As a Marketer, the ‘Scotty from Marketing’ meme troubles me.

Natalie Robinson

Director of marketing and communications, Melbourne Polytechnic

How do we break out of our marketing echo chambers?

Clients and agencies can get stuck into a particular way of behaving and viewing the world, but there are ways to break out of our marketing echo chamber.

Steve O'Farrell

Managing Partner, The Royals

If you think it can benefit both consumer and seller then it would be great

Simon Bird

Why Ford is counting on the Internet of Things to drive customer engagement

Read more

It's a good idea. Customers really should control their data. Now I understand why it's important.

Elvin Huntsberry

Salesforce CMO: Modern marketers have an obligation to give customers control of their data

Read more

Instagram changes algorithms every time you get used to them. It really pisses me off. What else pisses me off? The fact that Instagram d...

Nickwood

Instagram loses the like in Australia; industry reacts positively

Read more

I tried www.analisa.io to see my Instagram Insight

Dina Rahmawati

7 marketing technology predictions for 2016

Read more

The saying is pretty tongue in cheek. It's not saying that marketers are bad people, nor that they don't take themselves seriously. There...

LYF Solutions

The trouble with Scotty from Marketing - The CMO view - CMO Australia

Read more

Latest Podcast

More podcasts

Sign in