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- Climb's M&A Weekly: Deals by Automattic, Vista and Wiz
Climb's M&A Weekly: Deals by Automattic, Vista and Wiz
WordPress owners acquire another cross messaging platform and cloud security unicorn announces $350m deal
Nick @ Climb
April 14, 2024
Welcome to Climb Advisor’s weekly deal newsletter highlighting transactions announced last week across the B2B tech landscape.
Climb Advisors is an M&A and credit advisory firm focused on B2B software and services companies in the range of $5m to $100m+ enterprise value. We guide CEOs and business owners through the process of selling their business & assist investors in sourcing & closing great deals. We love to talk markets and share beneficial information - please reach out any time.
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Automattic shifts focus with acquisition of Beeper
Overview: Automattic, owner of WordPress and WooCommerce, is acquiring Beeper for $125M. Best known for their iMessage on Android Solution, Beeper marks Automattic’s second acquisition in the cross-platform messaging space after buying Texts.com last October. It is understood that Beeper and Text’s teams of 25 and 15 will join together to integrate the best of both company’s solutions into a single platform. Read more here.
Climb Comment: Big bet here from Automattic on open-source & cross-platform messaging. I’m sure most of us have at one time or another found ourselves talking with a colleague or friend across multiple messaging apps simultaneously & wondered - ‘why doesn’t someone bridge these platforms?’
Beeper currently connects 14 services, including WhatsApp, Messenger, Twitter, LinkedIn, Telegram and more into a single UX. The product roadmap aims to fully encrypt messages across these platforms. Beeper had raised more than $16m from Initialized Capital & YC as well as angels including Garry Tan. The product is currently free to use - will be interesting to see how Automattic monetizes moving forward.
Leading PE firm Vista Equity Partners to take Model N private
Overview: Vista is taking Model N (NYSE: MODN) private for $1.25B, roughly 5x revenue. MODN is a leading provider of revenue optimization and compliance solutions to life science and advanced technology companies, with their platform automating pricing, contract decisions, and incentivizing customers. Read more here.
Climb Comment: Model N automates things like contract pricing, dynamic discounting controls, & channel partner management for high tech businesses (14 of top 25 semiconductor companies) and managing compliance for life sciences & pharma customers.
The business has run right around breakeven profitability and a ~12% CAGR last 5 years, reporting $249m in ‘23 revenue with subscription revenue at 76% of total & 56% gross margin for Q1 ‘24.
Comps like this are very helpful to draw correlations to lower-middle market private market transactions. Low double-digit grower, breakeven but with decent gross margins, pushing $200m in ARR, and transacting at around a 6x ARR multiple.
Wiz makes Gem Security its second acquisition
Overview: Cloud security unicorn Wiz is acquiring cloud detection and response startup Gem Security for $350M. The acquirer is aiming to bolster the real time monitoring capabilities of their cloud security platform by adding Gem, which has raised $34M since being founded in 2022. This announcement marks Wiz’s second acquisition, following on from a deal for Raftt in December, with senior management outlining an ultimate goal of taking the company public. Read more here.
Climb Comment: Solid outcome for investors here with an exit at 10x capital raised two years in. ‘Real-time’ is the word in cybersecurity lately - the difference between retroactively solving security issues and catching them preemptively or as they’re happening is tremendous. As the shift into the cloud continues for global enterprise, threats become more complex and security responses do as well.
KKR backed Restaurant365 acquire ExpandShare and their AI-powered employee training platform
Overview: Restaurant365 provides an enterprise management platform purposely tailored to the needs of restaurants. With this deal for ExpandShare, they are integrating key features around training employees to improve customer experience and reduce staff turnover, supplementing their current offerings which include accounting, inventory, scheduling, payroll and HR solutions. It is understood that ExpandShare’s team of 30 will also join the acquirer post-transaction. Read more here.
Climb Comment: Clear strategic fit here as Restaurant365 continues on their goal to be a comprehensive platform for managing restaurants - currently supporting more than 40,000 locations. ExpandShare focuses on the employee piece of the equation - offering content libraries, digital checklists, ongoing staff & management training, and more. Customers will certainly be happy to have training integrated right into the platform they’re currently using for operations management.
Bloomberg Law announces deal for Dashboard Legal
Overview: Bloomberg entered the legal workflow space last year with the creation of Bloomberg Law Contact Solutions, an AI-powered solution for storing, searching, drafting, and negotiating contracts. This deal for Dashboard Legal reinforces their commitment to the sector. Their project management and collaboration platform was purposely built for the legal market to simplify task tracking, document management, and team-wide communication and collaboration, with co-founder and CEO Mat Rotenerberg joining the Bloomberg Law leadership team. Read more here.
Climb Comment: Legal tech has been quite hot lately & Bloomberg adds to their strength in the space with this deal. Law, like many other professional services are highly reliant on individual’s knowledge, discretion, and action, has been slow to digitize. But as new solutions reach the market, and especially as AI and ML have improved, technology is making the legal industry more efficient.
Some interesting product features in Dashboard Legal include dashboard view of all current legal processes in a firm with a ‘client view’ toggle, deadline reporting/task management, integrations including with Outlook, and real-time chat embedded in each dashboard.
Tweet of the week
Jason Lemkin (SaaStr) had an interesting tweet thread today around Dropbox highlighting that it is on track for ~$1 Billion in FCF in Fiscal 2024 but also some challenges with the business, including new customer growth . See more here.
Thanks for following along & hope you found something useful or interesting.
All the best,
Nick