MediaMath Has $180 Million To Spend On Acquisitions – So What’s Next?

While telcos and cable companies know programmatic is coming, the tech is still more pipe dream than fully laid pipe. And they see the need for a DSP to address the market.

“They knew the asset class because they own Rackspace and owned Charter and a whole host of TV/cable operators and digital out-of-home companies,” Zawadzki said. “They knew what those companies were looking for and saw the opportunity to bridge between their existing portfolio and next-generation marketing approaches.”

Searchlight is known for helping its companies make successful integrations, and not just with identifying acquisition targets, Zawadzki said. “They drive as much rigor post-close as the do pre-close.”

Multiple acquisitions will result, Zawadzki said. The company has made almost a dozen acquisitions over the years, including smaller companies, so in a sense the investment is a “return to its roots,” he said.

Making acquisitions to transform and enrich MediaMath’s DSP/DMP offering may make the company attractive to a buyer. As a private equity investor, Searchlight would probably want an exit within one to five years.

Safeguard wanted out of its 20% stake in MediaMath back in January, amid internal turmoil.

Finding a way to buy out Safeguard’s stake was a six-month process, Zawadzki said, adding that AT&T’s acquisition of AppNexus was incidental to Searchlight’s investment. “It just happened in the midst” of the process, he said.

But an investment from a private equity firm, and not an acquisition, may mean there aren’t any suitable DSP buyers in the market.

“[Searchlight’s investment] may signal that no immediate M&A opportunity exists for MediaMath. If a deal was imminent, Safeguard would sell its stake to the acquirer,” said Elgin Thompson, managing director at Digital Capital Advisors.

Zawadzki wouldn’t say if the investment from Searchlight diluted the stakes of employees and early investors, and he declined to comment on how the structure of the deal affected other investor classes.

Taking an investment from Searchlight could have been MediaMath’s best – or only – option as it strategizes about what to do next in a market with heavy competition from The Trade Desk and Google.

As CEO of an independent DSP, Zawadzki continued the drumbeat that independent is best.

“Who needs a DSP? Everybody. Who should own the DSP? The DSP,” Zawadski said, underscoring the need for a “world-class, independent enterprise stack.”

This post was syndicated from Ad Exchanger.