With its IT divestiture, Acxiom is all about marketing

Contact: Scott Denne

Acxiom pulls the trigger on a divestiture that was three years in the making. The marketing data services company has sold its IT services business to a consortium of private equity investors for $140m in cash upfront. Though IT services is no longer a fit for Acxiom’s growth strategy, the length of time and the complexity of the deal speak to some lingering alignments between its current focus and its soon-to-be-former IT services business.

In addition to the upfront cash, Charlesbank Capital Partners and M/C Partners are on the hook for an additional $50m earnout over the next three to five years, based on customer retention and EBITDA milestones. Acxiom will also take a 5% share of the profits of the new company once the paid-in capital has been returned. Acxiom will continue to own three of the datacenters from the IT business, which will pay their former parent for colocation, while Acxiom will pay for managed services from those three facilities, which still house portions of its marketing data division.

The unit generated $215m in trailing revenue and $86m in EBITDA for the previous fiscal year (EBITDA figures for more recent periods haven’t been published yet). That puts it below the multiples we typically see in a managed services acquisition. A perfect comp for this transaction, however, is tough to find. For one, it’s a divestiture, and those usually trade lower – and roughly in line with the revenue multiple on this deal. Also, there’s the fact that Acxiom is holding three of the datacenters, on top of the earnout and profit-sharing agreements. Finally, mainframes are a substantial component of this business, which is, obviously, not typical in today’s managed services transactions.

CEO Scott Howe and his team have spent nearly four years reshaping Acxiom into a digital marketing and data services provider from its roots in offline marketing data. Part of that involved splitting up the back end of the IT services business, as well as making several divestitures. It also inked its largest acquisition, last year’s $310m purchase of LiveRamp, which brought it technology that enables online and offline data matching, bringing new relevancy to its legacy offline marketing data business. With today’s divestiture, Acxiom’s entire revenue now comes from marketing data and services.

For more real-time information on tech M&A, follow us on Twitter @451TechMnA.