Innovation is Hard Quarter to Quarter: Marketo and Qlik Go Private

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This week two publicly traded, high flying technology companies have been acquired by private equity firms. Monday, the online marketing vendor Marketo announced that it was being acquired by Vista Equity Partners on a deal estimated in $1.79B. Just yesterday, Qlik Technologies technologies announced its acquisition by Thoma Bravo LLC for $3B. Both cases are examples of how tech stocks have been affected by the turbulence in public markets.

Tech Stocks Under Pressure

Despite posting strong numbers, both Marketo and Qlik have been under constant pressure in the public market. Marketo recently reported strong growths in revenue but also an increasing net loss as well as a weak guidance.

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Qlik has recently been downgraded by several analysts firms including RBC Capital and Citigroup.

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Innovation is Hard Quarter to Quarter

Marketo and Qlik Technologies can be considered leaders in their respective markets. However, both operate in highly competitive spaces filled with startups coming up with innovative and more affordable solutions. In that climate it is very hard for the incumbents to compete with that level of innovation while also keep up with the pressure of reporting strong quarterly earnings.

Consolidation is Happening in SaaS

Marketo and Qlik were not the only SaaS tech companies acquired this week. Salesforce.com also announced that it was acquiring Demandware for $2.9B. With tech stocks under constant pressure, the climate should be more favorable for M&A in the SaaS space. From that perspective, we could be witnessing the beginning of a strong wave of consolidation in the SaaS space.

PE Loves SaaS

This week’s acquisitions confirm that private equity are incredibly active in the M&A for public SaaS companies. Previously, other SaaS companies like SciQuest and Cvent were also acquired by PE firms. This highly constrast with the lack of appetite for legacy, on-premise technologies like Tibco or Informatica which were PE targets on the previous years.

Written by

CEO of IntoTheBlock, Chief Scientist at Invector Labs, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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