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<ul class="summary-list"><li><keyword id="10296" type="ENTERTAINMENT" weightage="60" keywordseo="Zoom">Zoom</keyword> is a potential investor in a <keyword id="1817616" type="ORGANIZATION" weightage="60" keywordseo="SPAC">SPAC</keyword> deal that could take <keyword id="3328070" type="PERSON" weightage="60" keywordseo="CVENT">Cvent</keyword> public, Bloomberg reported.</li><li>The video-conferencing group is apparently vying for a 10% stake.</li><li>Zoom recently announced a $14.7 billion deal to acquire Five9 in its biggest acquisition yet.</li></ul><p><a href="https://markets.businessinsider.com/stocks/zm-stock">Zoom</a> is in discussions to invest in a $5 billion blank-check deal that would take event-management software company Cvent public, <a href="https://www.bloomberg.com/news/articles/2021-07-21/zoom-is-said-in-talks-to-invest-in-cvent-blank-check-deal">Bloomberg reported</a> on Wednesday. </p><p>The popular video-conferencing app is a potential investor in Dragoneer Growth Opportunities Corp. II, which is merging with Cvent in a transaction that values the cloud-based company at more than <a href="https://www.wsj.com/articles/event-management-software-co-cvent-nears-5b-plus-spac-deal-11626808970">$5 billion including debt</a>.</p><p>Zoom is trying to secure 10% of the equity being raised to support the deal, Bloomberg said, citing sources. The investment could complement Zoom's burgeoning live-events strategy.</p><p>The company has been expanding its business through a series of recent product launches. On Wednesday, it announced the launch of a platform for hosting interactive and immersive virtual <keyword id="6385705" type="UNKNOWN" weightage="60" keywordseo="events">events</keyword> - <a href="https://investors.zoom.us/news-releases/news-release-details/zoom-elevates-platform-experience-launch-zoom-apps-and-zoom">Zoom Events</a>. Other new products include Zoom Phone, Zoom Room, and Zoom for Home.</p><p>Its software can also be used to administer chats, talks, and meet-ups on <a href="https://www.cvent.com/en/event-management-software/cvent-zoom-integration">Cvent's managing platform</a>. </p><p>Zoom declined to comment on its potential investment.</p><p>During 2020, the app became so popular that it was used for everything from graduation ceremonies to reunions, happy hours, and engagement parties. It recently went a step further to diversify beyond video chat by making its <a href="https://www.businessinhttps://markets.businessinsider.com/news/stocks/five9-stock-price-soars-zoom-video-cloud-billion-deal-transaction-2021-7">biggest acquisition yet</a>, the near-$15 billion purchase of cloud contact center software-maker Five9. </p><p>Analysts say it could be looking at <a href="https://www.businessinsider.com/analysts-companies-zoom-could-acquire-collaboration-ai-calendar-2021-7">11 other companies</a> including Calendly, Twilio, and 8x8 to move beyond video calls.</p><p>Zoom's stock price has surged more than 35% in the past 12 months, and is up 4% so far this year.</p><p><strong><em>Read More: </em></strong><em><a href="https://www.businessinsider.com/crypto-investing-spac-deals-upcoming-watch-lex-sokolin-blockchain-analyst-2021-7" target="_blank" rel="noopener noreferrer">The head economist at a blockchain fintech firm names 2 of the most promising crypto SPAC deals on his radar - and explains why blank-check companies can be better alternatives to buying cryptocurrencies</a></em></p>

Zoom may invest in a $5 billion SPAC deal to take event-manager Cvent public, report says

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reggie Aggarwal/Cvent</span></p><p class="caption">Cvent, CEO, Reggie Aggarwal</p></div><p></p></div></div>Well, that didn't take long. Less than three years after its IPO, events marketing firm Cvent has become the latest tech company to go private. </p><p>It's not exactly a unicorn-gets-killed story, but it's pretty close, and another chapter in the long-and-wild ride that is its founding CEO, <span class="caption">Reggie Aggarwal</span>'s career.</p><p>On Monday, <a href="http://finance.yahoo.com/news/cvent-enters-definitive-agreement-acquired-120100575.html">Cvent's management announced</a> that Vista Equity Partners bought the company for $32/share or $1.65 billion. That's an almost 70% premium over the share price on April 15, and over the past 30 trading days. </p><p>When the <a href="http://www.businessinsider.com/cvent-gets-60-pop-15b-market-cap-in-ipo-2013-9">company went public in 2013</a>, it had all the earmarks of an IPO success story. </p><p>The company priced its 5.6 million shares at $22, well above the initial range of $17-$19. Shares immediately popped by another $13. Revenue was climbing at the company and the previous year, 2012, it had swung to a $4.3 million profit, compared to a loss of $0.2 million in 2011.</p><p>The stock ticked along hitting a high above $43 in 2014 but cooled, trading at slightly above IPO price for much of 2015 and climbing to above $36 by the end of the year.</p><p>And then in 2015, signs began to appear that it wasn't going to be a hyper-growth company. The company divested its consumer ticketing business. <span>Aggarwal warned <a href="http://seekingalpha.com/article/3932926-cvents-cvt-ceo-reggie-aggarwal-q4-2015-results-earnings-call-transcript?part=single">analysts on the quarterly conference</a> that the recent history of beating Wall Street financial targets was coming to an end and that<span> "we don't expect to be able match that performance in 2016."</span></span></p><p>In 2016, the stock fell out of favor and plummeted to the low $20s until Cvent opted to bag the public thing altogether, leaving the public markets at just about the same valuation as it entered it.</p><h2>It almost died once before</h2><p>Cvent offers offers a cloud app that helps companies organize and manage their events, everything from online registration to processing payments.</p><p>It was founded in 1999, during the wild ride of the last tech bubble, with investors whispering in Aggarwal's ear to spend, spend, spend and grow, grow, grow, he told <a href="http://www.businessinsider.com/cvent-ceo-reggie-aggarwal-living-with-parents-multimillionaire-2012-7">Business Insider in 2012,</a></p><p>Then the internet bubble popped and <span>Aggarwal found himself with 125 employees, out-of-control monthly bills, and only $1.5 million in annual revenue. He had just signed a five-year lease on an<span> office space to house 250 employees thinking the investment money would go on. But after the market took a nose dive, he didn't have the cash to pay for it.</span></span></p><p>"We only had about $380,000 in the bank, which sounds like a lot, but not when you're burning a million a month,"</p><p>he told us in 2012 He renegotiated the lease, gave up his salary and was forced to move back in with his parents, at age 33.</p><p>"I'm going to take 100% of the blame because I'm CEO-but trust me, all of them [our investors] were encouraging us to do that, including our board. You know, grow, grow, grow, grow, grow," <span>Aggarwal <a href="http://www.businessinsider.com/cvent-ceo-reggie-aggarwal-living-with-parents-multimillionaire-2012-7">told Business Insider in 2012, </a>when his company was genuinely growing again. He said he had learned his lesson and became tightly focused on cost control after that.</span></p><p><span>And he scraped his company from the brink of bankruptcy into one that finished <a href="https://www.google.com/finance?q=NYSE%3ACVT&amp;fstype=ii&amp;ei=QvcUV4uYBebFjAHfnaaABQ">2015 with $187.7 million in revenue</a>, but that was heavily spending on sales and marketing and had swung to a loss again, with an operating loss of $16.50 million.</span></p><p>As for the focus on growth that got him into trouble in 2000, it sounds eerily familiar.</p><p>That's the <a href="http://techcrunch.com/2015/04/05/burn-rate-doesnt-matter/">same message investors were giving</a> startups during 2015's "unicornapoolza", where startups without much revenue were landing millions in investment at huge, billion-dollar valuations. Investors encouraged these young companies to spend their cash to grow, the idea being that cash flow and profits would arrive after they hit a certain size.</p><p>We've since seen a few of these startups <a href="http://www.businessinsider.com/the-inside-story-of-zenefits-2016-3">melt-down from hypergrowth, like Zenefits</a>. We're seeing some <a href="http://www.businessinsider.com/t-rowe-price-writes-down-dropbox-uber-others-2016-4">investors slash the valuations of others.</a></p><p>In the meantime, some tech leaders are insisting that <a href="http://www.businessinsider.com/benioff-predicts-dead-unicorns-cheap-startups-2016-1">highly valued startups should step up and go public.</a></p><p>But should they? Now, we're seeing an increasing number of tech companies leaving the public markets including <span>BMC Software,</span> Compuware, Dell, Riverbed, Informatica, Tibco and now Cvent.</p>     <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/dea-agent-explains-his-job-to-family-mike-vigil-deal-2016-4">EX-UNDERCOVER DEA AGENT: What I told my friends and family about my job</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="piNndsMjE6ztKMaQei1eCDbFGV31hEva" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

The wild ride of Cvent's CEO: from almost bankrupt to billion-dollar IPO to going private again

<p><div class="KonaFilter image-container float_right"><div class="image"><p class="source"><span><a href="http://www.flickr.com/photos/usnavy/5518035282/">Official U.S. Navy Page/Flickr</a></span></p></div><p></p></div>It doesn't matter how old you are: next time you interview for a job, be prepared to share your SAT scores.</p>
<p>In the timeless quest to predict future success in employees, a number of employers are turning to candidates' SAT results. Big-name consulting firms such as <a href="http://www.mckinsey.com/" target="_blank">McKinsey</a> and <a href="http://www.bain.com/" target="_blank">Bain</a>, as well as banks like <a href="http://www.goldmansachs.com/?cid=PS_01_05_07_00_00_00_01" target="_blank">Goldman Sachs</a>, are among the companies that ask newly minted college grads for their scores in job applications, <a href="http://online.wsj.com/news/articles/SB10001424052702303636404579395220334268350" target="_blank">according to an article in the Wall Street Journal</a>. Some other companies request scores even from candidates in their 40s and 50s.</p>
<p><span style="background-color: #ffffff;">For all these job seekers, the SATs are a distant memory. E</span>ven the newest Bachelor's recipients tend to be at least four years removed from the test. So why is it that even after people go to college, mature, and gain work experience, employers still care about a standardized test taken in high school?</p>
<p>Jonathan Wai, an intelligence expert and researcher in <a href="http://tip.duke.edu/" target="_blank">Duke University's Talent Identification Program (TIP)</a>, says the SATs are considered to be a measure of "general intelligence and general ability." That's important because research has shown that general ability "actually predicts occupational success across a range of occupations," he explains. </p>
<p>The SATs also appeal to many hiring managers because they're standardized. In theory, these test scores serve as an equalizer and mediate some of the <a href="http://www.businessinsider.com/the-problem-with-job-interviews-2013-6" target="_blank">well-documented biases</a> that normally influence the hiring process. For example, it's been found that managers generally prefer hiring people that are similar to them - be it in education, background, interests, or personality. This is called a "similarity bias."</p>
<p>The beauty of the SATs is that everyone takes them at the same time, with roughly the same level (if not quality) of education. In the broadest sense, someone's score on the SAT offers a glimpse of how they compare to other candidates in terms of general knowledge and ability. "It's standardized, and it's objective in that sense," Wai says.</p>
<p>Jeff Bezos, the billionaire founder and CEO of Amazon, is one of the most famous proponents of using SAT scores in hiring decisions. Bezos scored highly on a standardized IQ test when he was only 8 years old, and in his early days as a manager, he liked to ask candidates for their SAT results in interviews he conducted. <a href="http://qz.com/163262/even-as-a-child-jeff-bezos-was-a-data-obsessed-workaholic-genius/" target="_blank">He has said that</a><span style="line-height: 1.5em;"> "hiring only the best and brightest was key to Amazon's success."</span></p>
<p>Despite the benefits of using SATs in hiring, Wai admits the test is "not a perfect measure by any means" and questions how widespread its use as a hiring tool really is. He's also not sure how long the scores should be considered valid for. After all, he points out, scores on the GRE, the graduate school entrance exam, are good for only five years. That raises an obvious question for companies like Cvent Inc., which asks for SAT or equivalent ACT scores from job applicants of all ages, <a href="http://online.wsj.com/news/articles/SB10001424052702303636404579395220334268350" target="_blank">the Wall Street Journal reports</a>.</p>
<p>Wai hopes the emphasis employers like Cvent Inc. put on standardized tests won't encourage recent college graduates and experienced workers to start retaking the SATs. For one, people's scores probably wouldn't change much, he says. Additionally, the SAT would no longer offer the benefit of standardization if people were reporting scores from all different points in their lives instead of the score they got in high school.</p>
<p> </p><p class="tagline">Disclosure: Jeff Bezos is an investor in Business Insider through his
personal investment company Bezos Expeditions.</p>

Why Goldman Sachs, Bain, And McKinsey Ask Job Candidates For Their SAT Scores

<br />
When 80,000 coders from 9,000 IT companies were given a chance to fight the TechGig Code Gladiators 2015 battle using a weapon of their choice i.e. a  programming language they love, we realized that Java is the love of their life. Contestants preferred Java over 9 other programming languages, which includes: C, C++, C#, PHP, Java Script, Python, Perl, Ruby and VB.net.<br />
 <br />
TechGig Code Gladiators is a national level competition that showcases the company with the best coders and identifies the Best Coder in the Country.<br />
 <br />
In the initial online rounds of the Code Gladiators 2015, the top 100 coders battled it out face-to-face in the grand finale to win coveted titles and prize money of Rs 6 lakhs. And at the finale, when India got its five best coders, Java emerged as the most popular coding language among the top coders.<br />
 <br />
Apurv Gupta from Oracle (the winner), Surender Godara from SapientNitro (first runner-up), Victor Hoh from AWPL (second runner-up), <a href="http://www.techgig.com/ankitvij">Ankit Vij</a> from Cvent India Pvt Ltd (fourth runner-up) and <a href="http://www.techgig.com/hinabhatia1">Hina Bhatia</a> from <a href="https://www.facebook.com/pages/Steria/112676715413273?fref=ts">Steria</a> (TechGig Code Diva and best women coder) - all chose Java as their preferred language to sail through the contest.<br />
 <br />
"One thing all skilled coders agree on is that they love familiarity. When it’s time to write for heavyweight and scalable enterprise applications, techies reach for their most comfortable tool. Thanks to years of unrelenting backward compatibility, Java is that tool." says Vivek Madhukar, COO, TimesJobs.com<br />
 <br />
Speaking to TechGig after the finale, Surender Godara from SapientNitro said that for the first two virtual rounds, he was coding in C language but the final problems were so tough he had to switch to Java.<br />
 <br />
Only the third runner-up, <a href="http://www.techgig.com/sonusingal">Sonu Singal</a> from <a href="https://www.facebook.com/algoworkstech?fref=ts">Algoworks Technologies</a>, was the lone winner to code in C# (C sharp) in the grand finale of Code Gladiators.<br />
 <br />
Similar to <a href="http://articles.economictimes.indiatimes.com/2014-07-14/news/51485010_1_coding-talent-experience">the 2014 edition of TechGig Code Gladiators</a>, majority of the participants of this year’s contest too coded in Java, followed by C# and C/C++. Coders this year also turned to trending languages such as Python and Ruby.<br />
 <br />
The competition also saw the rise of the top five IT companies - <a href="https://www.facebook.com/PersistentSystems?fref=ts">Persistent Systems</a> (first), <a href="https://www.facebook.com/pages/Steria/112676715413273?fref=ts">Steria</a> (second), <a href="https://www.facebook.com/pages/IRIS-Software-Pvt-Ltd/228413760539823">IRIS Software</a> (third), <a href="https://www.facebook.com/itcinfotech?fref=ts">ITC Infotech</a> (fourth) and <a href="https://www.facebook.com/AmadeusSouthAsia?fref=ts">Amadeus South Asia</a> (fifth).<br />
 <br />
In terms of User Engagement &amp; Traffic metrics – the 2015 Edition of TechGig Code Gladiators racked up a record breaking - <br />
&gt; 100 Million+ Impressions<br />
&gt; 8 Million+ Users<br />
&gt; 1.5 Million+ Views<br />
&gt; 500K+ Visits<br />
&gt; 3.4 Million+ Twitter Impressions<br />
&gt; 250K+ Facebook Impressions<br />
<br />
(Image: india times)<br />
 <br />

Indian coders are in love with Java and here is the proof

<p><div class="KonaFilter image-container float_right click-to-enlarge"><div class="image on-image"><a title_source="Business Insider/Julie Bort" title_caption="Oracle CEO Larry Ellison" class="zoomin" href="http://static5.businessinsider.com/image/52406d05ecad0453218b456d-960/larry-ellison-pointing-1.png"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source">Business Insider/Julie Bort</p><p class="caption"><keyword id="43340" type="CITY" weightage="60" keywordseo="Oracle">Oracle</keyword> CEO <keyword id="146621" type="PERSON" weightage="60" keywordseo="Larry-Ellison">Larry Ellison</keyword></p></div><p></p></div>On the surface, Oracle's <keyword id="30334" type="ORGANIZATION" weightage="60" keywordseo="acquisition">acquisition</keyword> of a startup named Compendium <a href="http://www.oracle.com/us/corporate/press/2034974">announced Thursday</a> seems run-of-the-mill.</p>
<p>But it's really a signal that <a href="http://www.businessinsider.com/salesforce-oracle-postgresql-2012-10">the feud between Oracle and Salesforce.com</a>, and their flamboyant CEOs, Larry Ellison and <keyword id="361584" type="PERSON" weightage="60" keywordseo="Marc-Benioff">Marc Benioff</keyword>, is alive and well (despite the <a href="http://www.businessinsider.com/what-salesforce-got-out-of-oracle-2013-6">love-fest they threw last summer</a>).</p>
<p>Oracle bought Compendium for an undisclosed amount. Founded in 2007, Compendium manages corporate marketing blogs and has customers like Bass Pro Shop, Cvent, Gymborie. It raised $2.8 million in angel/seed funding (and took out $1 million in debt).</p>
<p>Here's the interesting part: Compendium was founded by <a href="http://www.linkedin.com/in/chrisbaggott">Chris Baggott</a>, who previously co-founded ExactTarget where he was CMO until he left for Compendium.</p>
<p><keyword id="154290" type="CITY" weightage="60" keywordseo="Salesforce-com">Salesforce.com</keyword> bought <a href="http://www.businessinsider.com/why-salesforce-bought-exacttarget-2013-6">ExactTarget in June for $2.5 billion</a>, it's largest-ever acquisition. CEO Scott Dorsey, ExactTarget's other co-founder, joined Salesforce.com.</p>
<p>Compendium is part of the dueling acquisitions between Benioff and Ellison.</p>
<p>Both companies are trying to dominate what looks to be the next big trend in <keyword id="6356323" type="UNKNOWN" weightage="100" keywordseo="Enterprise">enterprise</keyword> IT. Companies spend nearly $4 trillion a year on technology, mostly through their IT departments. But Benioff believes that by 2017, the chief marketing officer will buy more tech than the chief information officer. So he's building out his marketing tech offerings to grab that business.</p>
<p>Oracle wants the CMO's business, too, but Ellison is also trying to knock Benioff off his game.</p>
<p>These two companies and CEOs are like a parent/child relationship gone bad. Benioff once worked for Ellison at Oracle. <a href="http://www.businessinsider.com/netsuite-ceo-larry-ellison-invented-cloud-computing-2012-10">Ellison even gave Benioff the idea for Salesforce.com</a>, the story goes. Ellison was also seed investor.</p>
<p>But Salesforce.com's main product competes directly with one of Oracle's software businesses (Siebel Systems). Cloud computing became popular, largely thanks Benioff. In 2011, the two friends had a very public split when Ellison cancelled Benioff's keynote at Oracle World at the last minute.</p>
<p><div class="KonaFilter image-container float_right click-to-enlarge" style="width:300px"><div class="image on-image"><a title_source="Flickr/Dell's Official Flickr Page" title_caption="Salesforce CEO Marc Benioff" class="zoomin" href="http://static4.businessinsider.com/image/52601756eab8eab75daaec3c-960/marc-benioff-10.jpg"><span class="click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><a href="http://www.flickr.com/photos/dellphotos/6243635473/sizes/l/">Flickr/Dell's Official Flickr Page</a></p><p class="caption">Salesforce CEO Marc Benioff</p></div><p></p></div>Benioff responded by publicly bashing Oracle's cloud tech.</p>
<p>As cloud services gained steam among enterprise computing buyers, Oracle found itself trailing the trend.</p>
<p>In 2012, Oracle ramped up its cloud business through acquisitions including Eloqua, which it bought for $871 million. Eloqua and Salesforce.com were close partners so when Oracle bought it, it gained access to a whole bunch of Salesforce.com customers.</p>
<p>The quarter after Salesforce.com spent a fortune on ExactTarget, Benioff announced it was in the <a href="http://www.businessinsider.com/salesforce-on-track-for-1-billion-quarter-2013-9">middle of its first-ever $1 billion quarter</a>, in large part due to ExactTarget.</p>
<p>Now, ExactTarget's cofounder and former CMO is firmly in Oracle's camp, via the Compendium buy. The cherry on top? ExactTarget is one of Compendium's (now Oracle's) customers.</p>
<p>Oracle and Salesforce.com declined comment on this story.</p>

Watch Out Marc Benioff: Oracle's Larry Ellison Just Made A Killer Acquisition

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="https://www.flickr.com/photos/andrec/109986989/">andrechinn/Flickr CC</a></span></p><p class="caption">Private equity firms keep gobbling up ad tech companies.</p></div><p></p></div></div>The number of ad tech firms being bought by private equity companies has been steadily rising over the past three years and the trend shows no sign of dissipating.</p><p>Notable recent deals include <a href="http://uk.businessinsider.com/applovin-acquired-orient-hon-hai-2016-9">Applovin's $1.4 billion sale to Chinese private equity firm Orient Hontai Capital</a> in September and <a href="http://adexchanger.com/investment/vector-capital-agrees-purchase-sizmek/">Vector Capital's acquisition of Sizmek for $122 million in August</a>.</p><p>Results International, a UK-based mergers and acquisitions advisor, told Business Insider the number of private equity company buyouts of ad tech companies over the past three years has risen from four in 2014, to six in 2015, and to nine in the first three quarters of 2016.</p><p>If you include "mar tech" companies - many of which also supply ad-buying and other services to advertisers (like <a href="https://www.pehub.com/2016/08/vista-equity-closes-1-79-bln-marketo-acquisition/">Marketo, which was taken private by Vista in a $1.8 billion deal in August</a>)  - there have been 15 transactions in 2016 so far, according to data supplied by investment bank Petsky Prunier. In 2015, private equity firms were responsible for 20 ad tech/mar tech transactions, according to the Petsky Prunier data.</p><p>(See the full list of 2016 transactions below.)</p><h2>Why are private equity firms suddenly so hungry for ad tech?</h2><p>For many early ad tech companies, the clear exit strategy used to be building up your business so it was attractive enough to be bought by digital media giant like Google or Yahoo. But those kind of deals have become far less common in recent years. Venture capital money is still flowing into the ad tech market, but most of the rounds aren't as big as they used to be. And while there was <a href="http://uk.businessinsider.com/the-trade-desk-ipo-2016-9">a recent ad tech IPO</a>, that was the first since March 2015 as fewer ad tech firms opt to go public.</p><p>John Prunier, partner at Petsky Prunier, told Business Insider: "Confronted by scant interest from the largest and highest-paying strategic companies - Google most visibly - and a consequent drying up of growth capital, ad tech companies were forced to retool their products and business models."</p><p>Now, many ad tech firms have shifted to a software as a service (Saas) model, which means regular recurring revenues from clients, rather than having to rely on taking a margin from marketers' fluctuating digital ad spend.</p><p>Prunier said: "While managed services still generate a majority of ad tech revenue, most companies in the segment offer and are rapidly commercializing software-based solutions. This generates lower revenue, but it is the sort of revenue private equity has a greater confidence in and values more highly."</p><p>Ad tech firms now are seen by some private equity companies as less of a risk as they once were. Plus, because there is a large supply of ad tech companies in the market, many ad tech company valuations still remain attractively modest enough for private equity firms to begin building their own ad tech stacks.</p><p>Julie Langley, partner at Results Capital, told Business Insider: "Many private equity firms pursue what's called a 'buy and build' strategy. This means bolting on complementary geographies or technologies to a business they've acquired with the intention of taking it to IPO or selling it to a strategic buyer. There are large numbers of sub-scale ad tech businesses out there that would be good targets for this approach."</p><h2>The types of ad tech companies private equity firms are hungry for</h2><p>Private equity firms have been mostly leaning towards companies with SaaS models - hence the large number of martech acquisitions.</p><p>Langley said: "Traditional ad tech revenue models tend to be much more transactional - and easier to turn off - so are less predictable. Private equity much prefers enterprise software because of its stickiness. In other words: It's painful to rip out and replace. A SaaS license model offers a degree of assurance in terms of driving longer terms revenues. This means private equity firms can feel more comfortable in putting more debt into the business, this in turn helps to drive their upside."</p><p>Drilling down into the financials, Prunier said private equity firms tend to be looking to tick off this checklist (although he stressed this is indicative only):</p><ul><li>A minimum $30 million in gross profit</li><li>Marquee clients</li><li>A developed sales strategy with demonstrable customer acquisition costs and lifetime value metrics</li><li>Repeatable, if not wholly-recurring revenue</li><li>Evidence that operating leverage or some other driver of EBITDA margin expansion will be attainable</li></ul><h2>Is private equity interest good for the ad tech market?</h2><p>Private equity offers ad tech firms another liquidity option, offering the companies the potential to grow, both organically and alongside add-on acquisitions.</p><p>It's arguable that selling to a private equity firm isn't as sexy as being bought by Google or taking your company to IPO. It's probably reasonable to assume that data management platform <a href="http://adexchanger.com/data-exchanges/salesforce-buy-krux-closing-ad-tech-gap-rival-marketing-clouds/">Krux, which sold to Salesforce for a reported $700 million earlier this month</a>, received a better price from selling to a strategic investor like Salesforce than it would have done had it gone down the private equity route. Should private equity interest in the ad tech market be viewed as a good thing?</p><p>The fact that ad tech businesses now have the right cash flow, profile, profitability, and business model for private equity companies to show interest demonstrates the sector's maturity and market acceptance, according to Joshua Wepman, a managing director at investment bank GCA Global.</p><p>"The investment community has recognized this is an important asset of the digital economy, so they are looking at ways to benefit from this macro market trend towards digital," Wepman said.</p><p>The interest from private equity firms adds to the growing number of new entrants in the ad tech space - telecoms companies like Verizon, <a href="http://www.businessinsider.com/medianet-acquisition-chinese-ad-tech-arbitrage-play-2016-8">the growing raft of Chinese buyers</a>, and cloud companies like Salesforce and Oracle.</p><p>While some naysayers have been trying to write off the ad tech market as dead (except for a small pocket of big players), perhaps the uptick in private equity transactions suggests the opposite: ad tech is still very much on stage, but the ensemble of players has changed.</p><h2>2016 Ad Tech and Mar Tech/Private Equity transactions (Source: Petsky Prunier):</h2><p> </p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/china-world-robot-conference-beijing-artificial-intelligence-human-like-2016-10">China just showcased the world's most human-like robots, and they show how close we're coming to Westworld reality</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="QyNHh4NjE6wJdeMjoxiebeI-_J_qGCV2" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Private equity firms keep gobbling up ad tech companies - and the trend shows no sign of slowing

<p>A key role of the board is overseeing M&amp;A. Technology M&amp;A is having another record year and not showing any signs of slowing down. This year alone there have been 46 deals that were over $1 billion in value. While we've seen boom years in Technology M&amp;A before, something is different this time around.</p><p>The potential buyer universe has changed - the market has seen the rise of the new buyer-types:</p><ul><li><em>Foreign acquirors, especially China</em></li><li><em>Cross-industry buyers</em></li><li><em>Financial sponsors</em></li><li><em>Institutional Investors becoming Active Shareholders</em></li></ul><p><span>To put this phenomenon in perspective, 73% of U.S. based tech companies were sold to buyers who were either foreign, outside of the information technology industry or a financial sponsor, a huge shift in the breadth of the buyer universe since 2014.</span></p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Betsy Atkins" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/581a4bc8362ca4892e8b6577-960/screen shot 2016-11-02 at 4.21.12 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Betsy Atkins</span></p></div><p></p></div></div></p><p>Importantly, of the 27% of transactions where the buyer was ultimately a U.S. based technology company, a significant percentage had participation from foreign, non-technology or financial sponsor buyers in the process who bid but didn't win.<span>  </span>There is no doubt that the participation of these "nontraditional" buyers enhances the competitive tension of the process.<br /><span></span></p><p><span>So why does this shift dramatically impact your Boards? We all know board directors are subject to the duties of care. The issues a director will face during certain sale or merger transactions are subject to additional so-called Revlon duties to ensure that reasonable efforts are made to secure the highest price available. The carrying out of these duties is subject to intense scrutiny. It is a virtual certainty that an M&amp;A transaction of a publicly-listed company in the U.S. will ultimately lead to litigation focused on how the board conducted the process. So how do directors ensure they are getting the highest price available?</span></p><p><span>One of the most important things the board does when considering the sale of a company is selecting a financial advisor. Choosing a qualified, experienced financial advisor with relevant transaction capabilities who has knowledge of all the potential buyers will be one of the most important decisions you make.</span></p><p><span>Five years ago when the majority of deals were "tech to tech", "domestic to domestic", "strategic to strategic", there were probably 6-8 great full-scale/full-reach advisors along with 8-10 great boutiques to consider for selling your company. Today, unless you are certain that your company doesn't appeal to the cross-industry or international or financial sponsor buyer, your smart choices are going to be fewer if you want to reach that broad buyer group and get the highest price consistent with your fiduciary duty.</span></p><p><span>So let's examine the trends that have impacted the M&amp;A market in recent years and how this expanding universe of buyers in technology has shifted the board's advisory selection from boutique advisors to full scale advisors with complete buyer reach access to maximize shareholder value.</span></p><h2>Foreign Buyers</h2><p><span>In the past decade, inbound M&amp;A activity of foreign companies buying U.S. companies has dramatically increased and is now a fifth of U.S. Tech buyers. Geographies such as China have increased their outbound M&amp;A transaction volume. In the first 6 months of 2016 alone, there have been</span></p><p><span>$28 billion China announced outbound M&amp;A transactions (see chart below), including Ingram Micro's $6 billion sale to HNA Group's Tianjin Tianhai, which was the largest outbound acquisition by a Chinese company in the technology sector so far.</span> </p><p><span><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Betsy Atkins" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/581a4bf4362ca4372e8b6617-960/screen shot 2016-11-02 at 4.21.19 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Betsy Atkins</span></p></div><p></p></div></div></span></p><p><span>Additionally, tax inversions where targeted U.S. companies are re-domiciled abroad have been increasingly common transaction structures attracting foreign buyers. Applied Materials' $9 billion merger with Tokyo-Electron (which was later terminated due to anti-trust concerns) was motivated in part by both companies' desire to lower corporate income taxes on future earnings through an inversion structure. The implication for the board of these transactions is clear: an effective financial advisor must have a global network with knowledge and access to potential buyers who will emerge from other geographies.<span>  </span>That gives you a number of great choices but they need to be from among the global firms that have bankers around the globe with access to and knowledge of these interested foreign buyers.</span></p><h2>Cross-Industry Buyers</h2><p><span> Increasingly buyers outside of your company's industry have emerged as competitive acquirors.<span>  </span>In 2015 alone, there were $28.4 billion cross-industry technology acquisitions, vs. $10.8 billion in 2012. This is an amazing 263% increase in cross-industry buyer activity. Often it depends on your company's specific cross-industry appeal. A common theme has been cash-rich, mature buyers seeking new growth platforms to build on.<span>  </span>Information technology provides lots of examples of nontraditional companies acquiring companies in technology such as Monsanto's purchase of The Climate Corporation, Verizon's purchase of AOL and more recently Yahoo, and Walmart's acquisition of Jet.<span>  </span>For these acquisitions to succeed, the financial advisor needs the ability to advise the board to include these cross-industry buyers in the sale process. Importantly, they need the relationships and knowledge to cultivate these new buyers who fall outside of tech. With 15 or so industries to cover, this leads us back to the larger firms that have access to the top buyers across industries, not just tech. </span></p><h2>Financial Sponsor Buyers</h2><p><span>Financial sponsors, or private equity firms, have become increasingly active.</span></p><p><span><span><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Betsy Atkins" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/581a4c07362ca41c258b66a6-960/screen shot 2016-11-02 at 4.21.31 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Betsy Atkins</span></p></div><p></p></div></div></span></span></p><p><span>To properly gauge the interest of financial sponsors and to advise the board if and when you should invite financial sponsors into a sale process, your financial advisor needs to have close relationships with the relevant financial sponsors. Most importantly, have the knowledge to assess their financial capacity to compete against strategic buyers and know the maximum amounts they can aggressively pay.<span>  </span>A key component of credibility for Directors in determining the sponsors' wherewithal comes from the financial advisor's leverage lending expertise (both in the bank and bond markets) which are relied on to fund sponsor M&amp;A transactions. <span>  </span>Without real-time knowledge of the leveraged finance markets, your financial advisory will not be able to credibly determine the cost of financing that the sponsor relies on, and as a consequence, will not have the insights necessary to determine what price a financial sponsor could ultimately be able to pay. Several months ago, you would think ok, financial sponsors wouldn't pay 6.5x revenues and 69% premium for Cvent or 5.9x revenues and a 64% premium for Marketo which Vista Equity Partners did earlier this year.<span>  </span>Most recently Infoblox was sold to a private equity firm at the highest premium ever paid by a financial sponsor for a technology company (73%).</span></p><p><span>Having in depth knowledge of this market and the sponsor's financial capacity and desire is a critical component of the advice that financial advisors need to provide.<span>  </span>We saw in the financial crisis of 2008 many of these financial sponsor-backed bids fell through, the consequences of misreading this market <em>(guessing based upon prior deals instead of being in the leveraged finance market trading securities every day and knowing what is possible)</em></span><span> </span><span>can be devastating.<span>   </span></span></p><h2>Activist Shareholders</h2><p><span>Although not typically a buyer of companies, activist shareholders are another player now impacting M&amp;A transactions.<span>  </span>Activist investing is not only the domain of a core group of hedge funds anymore, even institutional investors are becoming increasingly engaged.  Of the campaigns announced in the last 12 months alone, ~86 separate investors have targeted more than 160 companies.  Of these campaigns, 69 have led to activist additions to the board of directors, 21 have led to proxy fights and 10 have resulted in sales of the target company.<span>  </span>Many examples exist in technology of activists having direct involvement in situations which ultimately end in a sale of the company including my board, Polycom's, recently announced merger with Mitel which later evolved into a sale of Polycom to Siris Capital.<span>  </span>Having a financial advisor who has an experienced activism defense team is important in preparing the board early in building and articulating the company's long-term plan for value creation and helping the management and board understand their strategic landscape and M&amp;A scenarios. </span></p><p><span>More M&amp;A activity over the next year is likely due to continuing improvements in economic conditions, significant cash reserves and investor pressure for increasing shareholder returns.<span>  </span>M&amp;A remains top of mind for directors. The factors that go into deciding the selection of your financial advisor should be carefully considered. Only an advisor with strong capabilities across all of the new emerging trends will enable you and your board to maximize value for your shareholders. </span></p><p><em>Betsy Atkins is CEO of Baja Corp, an early stage venture capital firm she founded in 1993 and has served on some 25 public company boards.</em></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/elon-musk-unveils-solar-roof-solarcity-video-2016-10">Elon Musk just unveiled something that could revolutionize how you power your home </a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="ZtcHQzNzE6rJiNVeNBtErYRi4yljUmMb" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

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