A US$1.79-billion deal by Vista Equity Partners to buy Marketo is already being called unfair to investors, but industry analysts sound equally concerned the transaction could cause problems for the marketing automation vendor’s customers as well.
Last week, San Mateo, Calif.-based Mateo said it hoped the deal with Vista would clear antitrust approvals and shareholder clearance to close by the third quarter of this year. The day after the announcement, however, former United States Securities and Exchange Commission attorney Willie Briscoe and the securities litigation firm Powers Taylor LLP said they are investigating potential claims against Marketo’s board that the company was significantly under-valued.
In the meantime, Marketo’s existing customers in Canada (and its prospective ones) will need to evaluate whether the acquisition will give the company more resources or throw a wrench into its deployments. Marketo tried to reassure brands in a blog post immediately after the deal was made public.
“Marketo’s mission and vision remain unchanged, and Marketo will continue its commitments to and passion for its customers and partners,” the post said. “We believe that the resources and financial strength of Vista will allow Marketo to continue its fast growth and cement its leadership position as the independent marketing technology leader.”
According to analysts from Digital Clarity Group and Constellation Research, however, there are still several question marks if Vista succeeds in buying Marketo.
For example Cindy Zhou, a Constellation research analyst who had also been a Marketo customer when she worked at other companies, said the deal may have implications for things like Project Orion, an initiative to build better big data analytics capabilities into its offering, as well as recently-announced account-based marketing features.
“I would just be concerned about promises from a product delivery perspective – are those timelines going to be what they were?” she said in a webinar last week where Constellation and Digital Clarity Partners debated the deal, adding that Vista could also change Marketo’s flexible pricing and annual renewal terms.
“Vista is known for a very staunch approach when they acquire an organization,” said Cathy McKnight, Digital Clarity Group’s vice-president of operations, suggesting that any areas of Marketo’s business that weren’t helping the bottom line or operating at a loss could be affected. Even R&D spending could be cut back.
“There could be a significant slowdown in innovation,” she said.
Scott Liewehr, Digital Clarity Group’s co-founder and CEO, said Marketo may have had little choice but to put itself on the block, given Oracle’s purchase of Eloqua a few years ago and similar investments in marketing automation from Adobe and Salesforce.
“Quite frankly, it’s hard to be one of the few standalone enterprise-ready marketing automation platforms,” he said. “When your bread and butter is marketing automation and you don’t have other products to ay the bills, you can’t do the competitive pricing that others were doing.”
In its blog post, Marketo insisted customers should not worry about the outcome.
“All customer commitments remain in place and there will be no changes to the working relationship,” it said. “And there are no pricing changes planned based on this transaction.”
Marketo first launched in 2006 and works with brands such as GE and Microsoft, the latter of which was also rumoured to be among the potential bidders.
