M&A Alert—May 14, 2014
Acxiom Acquires LiveRamp for $310M
Author: Eric F. Risley
Transaction Size: $310mm
On May 14, 2014, Acxiom (NASDAQ: ACXM, market cap: $1.6b) announced the acquisition of LiveRamp for $310mm in cash.
Over time, corporate (brand) marketers have built-up a significant repository of information on their customers, their purchase habits and preferences. This data, often referred to as first party data, resides within corporate customer relationship management (CRM), loyalty program, marketing, call center and transactional systems. Much, if not most, of this data relates to offline interactions between a customer and the brand. These offline interactions may be a purchase in a physical store, a call to a call center, the redemption of a discount coupon or the use of a branded, loyalty credit card.
LiveRamp allows corporate marketers to access and package this offline customer data and use it to inform their online marketing and advertising efforts. Simplistically, LiveRamp allows the corporate marketer to “onboard” their offline customer data into a wide variety of online marketing applications offered by over 80 partners. The brand’s offline customer data, combined with online interaction data and the targeting capabilities of these applications, enhances the effectiveness of marketing and adverting efforts executed by corporate marketers.
LiveRamp data integration partners including Adobe, AOL, AdRoll, Google, Epsilon, Experian, Turn, X+1, MediaMath, BlueKai and Twitter, among many others. More than 250 brands in the retail, travel, auto, telecommunication, publishing and financial services industries use LiveRamp.
LiveRamp is based in San Francisco and has received $32mm in funding from Draper Nexus Venture Partners (Mitch Kitamura), Industry Ventures, North Bridge Venture Partners (Paul Santinelli), Rembrandt Venture Partners and SoftTech VC. Following the transaction, LiveRamp will maintain an open platform supporting existing and new clients. All 70 LiveRamp employees are expected to stay with the company.
Acxiom is a SaaS-based enterprise data and analytics company based in Little Rock, AR. Acxiom primarily operates in two segments: i) marketing and data services and ii) IT infrastructure management. The marketing and data segment is involved in data sourcing, managing customer marketing databases and analytics. The IT infrastructure management segment provides server hosting and cloud computing services. Acxiom’s TTM revenues are $1.1b and TTM EBITDA of $202.2mm.
In late 2013, Acxiom launched the Audience Operating System (AOS), which is an open platform that offers marketers, agencies and publishers a way to manage and reach target audiences across online and offline channels. AOS has three layers: data layer (ingest and unifying different types of data); operations layer (match and contextualize data to ads); and applications layer (application partner network).
CEO Scott Howe was a key executive sponsor of the transaction.
Acxiom is acquiring LiveRamp for $310mm in cash. The deal is expected to be dilutive to Acxiom earnings. Paul Santinelli, a partner with LiveRamp-backer North Bridge Venture Partners, stated LiveRamp was doubling its revenue year-over-year and that the purchase price multiple was better than 11.0x revenue. That implies LiveRamp’s revenues are approximately $28mm.
Transaction Value: $310.0mm
TV/Revenue Multiple ($28.2mm) 11.0x+
TV/Invested Capital Multiple ($32.0mm) 9.7x
Recent comparable M&A transactions that leverage offline data as part of their solution include Oracle’s acquisition of BlueKai for $350mm – $400mm (5.5x – 6.3x revenue) and Neustar’s acquisition of Aggregate Knowledge for $119mm.
LiveRamp’s competitors include DataLogix, eXelate, AudienceScience and BlueKai (acquired by Oracle), among others.
With the acquisition of LiveRamp, Acxiom bridges the gap between offline CRM data and online marketing efforts. Scott Howe, Acxiom’s CEO, estimates that only 5% of Acxiom’s 8,000 clients currently use their offline data for online purposes. This represents a significant market opportunity to enhance online ad targeting, analytics and attribution.
Architect Partners’ Observations
Acxiom is paying a large premium to acquire LiveRamp, specifically 11 times LiveRamp’s revenue and 9.7 times the company’s invested capital. This is significantly higher than Acxiom’s current valuation of 1.3 times trailing-twelve-month (TTM) revenue, suggesting the strategic importance of LiveRamp to Acxiom.
Continuing our long running theme of M&A occurring between two parties that have an established business relationship, LiveRamp and Acxiom have worked together on various client projects over the past two years and currently have clients in common.