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- Climb's M&A Weekly: Perplexity AI, Grammarly and BlackBerry All Feature
Climb's M&A Weekly: Perplexity AI, Grammarly and BlackBerry All Feature
OpenAI competitor valued at $9 billion completes acquisition, AppDirect acquires IT asset management firm and BlackBerry offloads Cylance for $160 million
Nick @ Climb
December 22, 2024
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Unbelievable how quickly the year is wrapping up!
Want to again highlight an update from our side to start the newsletter this week —
Given our deal recent momentum + positive M&A sentiment in the markets, we are having many inbound conversation re: M&A. Therefore, we are launching two new advisory services for sellers.
“Quick Shop” - Think of this as a “test the waters” type process to see interest. We will run outreach to a limited pool of highly relevant strategic and financial buyers to determine real time market interest & valuation in your business. Process takes ~1 month start to finish.
“Retained Advisory” - For companies interested in selling 12-24 months out, we will prepare your data room, manage all inbound interest, prepare draft of CIM and identify areas to improve and prescribe advice based on our knowledge of latest market trends.
If either of these engagement models pique your interest, or if you’re looking to run a full-scale exit process, please do get in touch.
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Perplexity AI, an OpenAI competitor completes acquisition of Seattle startup Carbon
Overview: Perplexity, a generative AI-driven conversational search engine leveraging large language models (LLMs) to provide query-based answers, has announced its acquisition of Carbon, a startup specializing in connecting data sources to LLMs. The integration will provide companies with insights from their scattered data sources enhancing decision making and operational efficiency. Read more here.
Climb Comment: Perplexity reportedly raised a $500m round at $9B valuation recently - quite a bit more than Carbon’s $1.3m 2023 seed round. This acquisition enables Perplexity to expand its capabilities by integrating enterprise work files and communication platforms such as Google Docs and Slack. By allowing users to efficiently search and analyze extensive datasets accumulated over time, Perplexity seeks to bridge the gap between generative AI and enterprise productivity tools. AI arms race continues!
BlackBerry sells cybersecurity platform Cylance for a massive loss
Overview: Arctic Wolf has announced the acquisition of Cylance, a cybersecurity business operated by BlackBerry. The acquisition will close for $160 million, a sharp decrease of the $1.4 billion BlackBerry paid to purchase the startup in 2018. The deal components include cash of $80 million and 5.5 million shares of Arctic Wolf’s common stock. The integration will enhance Arctic Wolf’s security offerings, while it reflects BlackBerry’s eagerness to pivot away from underperforming assets. Read more here.
Climb Comment: M&A is not always accretive, with headline/brand-name deals often being the worst culprits of value destruction. Cylance posted a net loss of $51m for the current fiscal year, dragging down BlackBerry’s broader cybersecurity margins. Cutting losses can be as good a reason as any to engage in an M&A deal/divestiture - will be interesting to see whether Arctic Wolf is able to profitably integrate.
Grammarly announces acquisition of productivity platform, Coda
Overview: Grammarly, the AI-powered writing assistance leader valued at $13 billion, has acquired Coda, a productivity startup known for its flexible Coda Docs platform. This strategic acquisition enhances Grammarly’s enterprise capabilities, combining its trusted AI assistance with Coda’s solutions for business workspaces. A flagship offering of Coda is its Coda Brain, an AI-powered solution integrating knowledge across 800+ enterprise applications. Grammarly plans to unify its assistant with Coda Docs, to create a platform where users can utilize AI for writing and productivity. Read more here.
Climb Comment: Grammarly has had a tough road in the post Chat-GPT landscape and here hopes to gain some ground on the AI & productivity fronts with integration of Coda. Coda CEO Shishir Mehotra (previously Chief Product Officer & CTO at YouTube) will take the reins of the combined entity as new CEO of Grammarly.
OPSWAT acquires cybersecurity firm Fend Incorporated
Overview: OPSWAT, a provider of critical infrastructure cybersecurity solutions, has completed the acquisition of Fend Incorporated, a robust cybersecurity firm. Fend has been utilized by the U.S. government, utilities, and in the oil and gas industries to prevent ransom attacks and cyber threats. This acquisition reflects OPSWAT’s M&A growth strategy, having acquired InQuest earlier this year and deepens OPSWAT’s commitment to delivering comprehensive security solutions tailored to the needs of critical industries, strengthening its ability to safeguard assets. Read more here.
Climb Comment: Big moves in cybersecurity for critical physical infrastructure with OPSWAT acquiring Fend. Fend’s data diode technology creates a secure one-way communication channel, allowing data to flow from one network to another while physically blocking reverse transmission.This fits OPSWAT’s mission to solve customers' challenges around the world with zero-trust solutions - crucial in situations where real-world assets are at risk.
AppDirect expands into the hardware space with acquisition of Firstbase
Overview: AppDirect, a B2B commerce platform has announced the acquisition of IT asset management platform Firstbase. The acquisition marks a significant expansion of its capabilities into hardware asset management. This strategic deal positions AppDirect as a comprehensive solution for managing software, telecom, and hardware assets on a unified platform. Firstbase, recognized for its streamlined management of IT hardware lifecycles, complements AppDirect's existing offerings by enabling businesses to efficiently oversee their end-to-end IT infrastructure. Read more here.
AppDirect has stated their mission to be a ‘B2B Everything’ platform & adding Firstbase’s IT asset management platform adds scale & partner channels to that end.
“AppDirect’s vision to build the B2B-everything platform fits perfectly with ours at Firstbase. Together, we can solve all the major problems the biggest companies and most innovative CIOs face across both software and hardware,” said Chris Herd, Founder and CEO of Firstbase.
As large enterprises look to streamline key business functions, the ability of platforms such as AppDirect to offer full-cycle management capabilities becomes even more important.
Article of the week
Interesting trends in this IBM study - 85% of respondents claiming to have made progress on AI initiatives this year and almost half planning to leverage open-source AI tooling to achieve further ROI.
Thanks for following along & hope you found something useful or interesting. Please don’t hesitate to reach out if you’re considering a sale as we move towards 2025 - we’re always glad to chat & share perspective.
All the best,
Nick