M&A Alert—April 4, 2017
Yelp acquires WiFi marketing company Turnstyle Solutions for $20 million.
Author: Eric Risley, John Ascher-Roberts
Transaction Size: $20mm
On April 4, 2017, Yelp (NYSE:YELP) announced an agreement to acquire WiFi marketing company Turnstyle Solutions for $20 million in cash.
Turnstyle Solutions, Inc. provides location based marketing solutions and consumer analytics for bricks and mortar retail stores and restaurants. The company offers free, public WiFi in its customers’ stores as a digital marketing tool. To gain access to the WiFi, it asks visitors to give their contact information, which TurnStyle then turns into customer contact lists. Its cloud-based dashboard then enables retailers to create relevant email or SMS marketing campaigns and loyalty programs based on those lists, while also providing analytics on repeat visitors, shopping behaviors, dwell times and attribution. The company currently supports over 3,500 business locations primarily in the U.S. and Canada. Its marquee customers include Back Alley Burger, Burger King, Broncos Slider Bar, Subway, and others. Its competitors include Euclid Analytics, PlaceIQ, Brickstream, and Zenreach.
Matt Hunter, Devon Wright (CEO), and Chris Gilpin (CTO) founded the Toronto-based company in 2012. The company received $3.7 million in funding from 500 Startups and MaRs Discovery District investment arm, and has 36 employees in their Toronto office.
Yelp is the largest local review and recommendation site, with over 121mm review submissions and 145mm monthly unique visitors. Yelp operates an online city guide that helps people find restaurants, shops, food, nightlife, arts and entertainment, local flavor, active life, event planning and services, hotels and travel, beauty and spas, education, health and medical, home services and other professional services. Yelp was founded in 2004 and is headquartered in San Francisco, CA.
Yelp has a market capitalization of $2.6 billion. It has LTM revenues of $713 million.
Yelp is acquiring TurnStyle for $20 million in cash.
Transaction Value: $20M
TEV / Invested Capital 5.4x
Comparable transactions include The Mobile Majority acquisition of Gimbal in December of 2016 (undisclosed, covered here), Ebates’ acquisition of Shopular in March of 2016 (undisclosed), Tyco’s acquisitions of Shoppertrak in December of 2015 for $175M (2.3x LTM revenue, covered here) and Footfall in July of 2015 (undisclosed), Groupon’s acquisition of Swarm Mobile for $11.2M in November of 2014 (2.5x invested cap) and Acxiom’s acquisition of Liveramp in May of 2014 for $310M (11.0x LTM revenue, covered here).
Adding Turnstyle to its platform positions Yelp as more than just a local review site. With its Request-A-Quote, Eat24, Yelp Platform transactions and Yelp Reservations offerings as well as its recently acquired Nowait app, Yelp has become an essential platform for businesses to run their day-to-day operations, creating an overall higher dependency on the Yelp platform. Additionally, by combining Yelp’s search intent data with Turnstyle’s offline intent data, Yelp will now have an effective marketing tool to offer local businesses. With similar offerings proximity marketing tools being by competitors such as Angie’s List, Foursquare, Google & Facebook, Turnstyle helps solidify Yelp as the leading local discovery and SMB platform.
Architect Partners’ Observations
According BIA Kelsey, U.S. local advertising revenues are expected to exceed $172 billion by 2020. Also, it predicts that within the next two years local ad spending in digital media will surpass local print media for the first time. This acquisition allows Yelp to remain the leading local customer acquisition platform in the U.S. and Canada.