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
Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags digital marketingMarketomarketing technology

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Katherine Noyes

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?