Endurance International pushes its M&A efforts into a new bracket with the $1.1bn purchase of email marketer Constant Contact. Endurance has printed dozens of acquisitions since its founding, though nothing of this magnitude: since 2002, its median deal size was only $44.9m across 13 transactions, according to 451 Research’s M&A KnowledgeBase. It’s not just the size of the deal, though – Endurance is also departing from the past in terms of strategy.
Previously, the company focused exclusively on obtaining customers by bolting on other Web hosting vendors. With Constant Contact, it’s adding a new set of services to sell to its existing base – as well as indicating to the market that there’s a larger universe of acquisitions that it can now consider.
Constant Contact’s sale comes at the tail end of a flurry of email marketing M&A earlier this decade – and at a decidedly lower multiple than most. At the high end of outcomes, ExactTarget and Responsys were able to land enterprise valuations above 7x trailing revenue, whereas Constant Contact is fetching just 2.6x.
Growth accounts for some of the difference in valuations. ExactTarget and Responsys were putting up quarters of 37% and 26% year-over-year growth, respectively, prior to their exits, while Constant Contact is coming off a quarter of 13% growth. Also, SMB-focused firms like Constant Contact tend to garner conservative valuations. In its sale to Vocus in 2012, iContact, a smaller SMB email marketer, landed just 3.5x TTM revenue after a year of 25% topline growth.
Endurance International’s largest deals since 2002
Source: 451 Research’s M&A KnowledgeBase
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