E23: The Take Private of a Zombie by Bending Spoons for $233M

SummaryIn this episode of the Inorganic Podcast, hosts Christian Hassold and guest Erik Morton delve into the planned acquisition of Brightcove by Bending Spoons. They explore the dynamics of the deal, the market context, and the implications for both companies. Brightcove, a pioneer in online video hosting, faced challenges in a competitive landscape that evolved substantially due to digital video creation and storage innovation, notably the free models offered by YouTube and Vimeo. Christian and Erik discuss Bending Spoons' pattern of being an acquirer of distressed businesses and how they typically run the businesses post-acquisition to maximize return on investment. This episode is an interesting look at how tech “Zombies” find a home through strategic acquisition when operating standalone is not a credible option.TakeawaysThe acquisition of Brightcove by Bending Spoons is part of a broader roll-up strategy that has been executed multiple times prior.Bending Spoons has been particularly interested in notable companies that became distressed due to commoditization or lack of differentiation, yet still had loyal enterprise or SMB customer bases.The acquisition price reflects Brightcove's current market challenges and growth.Public companies face immense pressure to grow, leading to take-private transactions when they cannot without making drastic changes that public markets don’t appreciate.The concept of 'zombie' companies is relevant in today's market, highlighting the impact of stagnation on management and employees.We will see more transactions like these as Zombie companies both public and private face growth challenges.Chapter Markers0:00 Introduction2:52 Background on Brightcove5:15 Background on Bending Spoons07:18 Insights on the Deal Valuation11:37 Brightcove's Engineering Costs & Financial Health14:48 Anticipating Radical Changes Post-Acquisition21:46 Investor Returns and Employee Compensation28:25 Takeaways 32:12 ConclusionConnect with Christian & In/organic PodcastChristian's LinkedIn: https://www.linkedin.com/in/hassold/In/organic on LinkedIn: https://www.linkedin.com/company/inorganic-podcastIn/organic on YouTube: https://www.youtube.com/@InorganicPodcast/featuredConnect with E20 guest, Erik Morton on LinkedInhttps://www.linkedin.com/in/erikimorton/ Hosted on Acast. See acast.com/privacy for more information.