Yesterday, Adobe acquired marketing automation company Marketo from its parent company, Vista Equity Partners, for $4.75B — their largest acquisition to date.
And, while the union itself isn’t a surprise (Adobe has been expanding its marketing suite for years), the massive terms of the deal were an impressive victory for Vista.
Adobe is gearing up for the battle ahead
The company spent $1.8B on analytics platform Omniture in 2009, $240m on app-builder Day Software in 2010, $540m on TubeMogul in 2016, and $1.68B on e-commerce platform Magento this year.
Why the billion dollar mar-tech shopping spree? Adobe desperately wants to steal market share from Salesforce, Microsoft, and Oracle. To do that, they need to expand beyond Photoshop.
Adobe’s recently launched “Digital Experience” department is growing 21% YoY by offering a suite of marketing tools. But, it still only accounts for 27% of their revenue, so Adobe hopes Marketo will boost their profitability.
The real winner is Vista Equity
Vista Equity Partners acquired Marketo for $1.79B in cash in 2016.
By selling the company to Adobe for $4.75B, the company made $2.96B profit — a 165% return in just 2 years.
For context, private equity funds have returned an average of 13.5% over the past 20 years, and even venture capital funds have returned just 30%.