Looks like ad tech M&A is finally starting to heat up after an extended ice age.
On Wednesday, private equity firm Novacap announced plans to acquire advanced TV advertising company Cadent.
The deal is valued at about $600 million, a source told Insider. A Cadent spokesperson confirmed this price with AdExchanger.
“It’s a good return and a win for our shareholders,” said CEO Nick Troiano.
This isn’t Cadent’s first dance with PE.
Novacap is buying Cadent from another private equity firm, Lee Equity Partners, which acquired the company in 2013. (Lee itself acquired Cadent from a trio of other PE firms: BIA Digital Partners, Spring Capital Partners and Clarion Capital Partners.)
Cadent had several private equity suitors, Troiano said, but went with Novacap because the firm has a reputation for growing telecom media companies in particular.
Whereas Lee was more focused on short-term growth that could produce liquidity, Troiano said, Novacap gives Cadent the resources to pursue a “long-term view for the next three to five years.”
Specifically, Cadent wants to expand beyond linear TV and streaming into other channels, including display, social, audio and out-of-home.
Planning ahead
Cadent has been on a yearslong track record of consistent revenue growth between 15% and 20%, Troiano said.
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But a new private equity partner will give Cadent “a stronger balance sheet to make acquisitions and invest in future growth” beyond its current TV-related offerings, he added.
Cadent already took the first step in that evolution with its recent purchase of bankrupt EMX’s supply-side platform tech, which has display inventory and puts Cadent in a better position to pursue a more omnichannel route.
The EMX acquisition helped Cadent secure a lot of digital inventory, said Samuel Nasso, principal at Novacap and now chairman of Cadent’s board.
“Cadent already has significant traction selling connected TV inventory, but its platform and identity graph could be used for so much more than that,” Nasso said, referring to digital display and audio.
Poised for programmatic
Novacap expects to fund Cadent’s investments in companies that will help it continue to “scale up” by securing both more digital supply and digital ad budgets from agencies, Nasso said.
Until now, Cadent focused almost exclusively on advanced TV, meaning that advertisers buying TV campaigns programmatically through its platform would also have to work with a different vendor to extend those campaigns to other channels.
Nabbing more digital inventory can also make programmatic ad budgets perform more efficiently.
An omnichannel platform would reduce the number of hops advertisers have to take between tech partners, Troiano said, and increase yield for publishers looking to aggregate their supply for audience-based campaigns regardless of channel.
“Our identity graph extends well outside of TV – it can extend into any IP-connected platform with audience [targeting],” Troiano said. “We’ve only scratched the surface in terms of what we can do.”
Editor’s note: This piece was updated to reflect the confirmed valuation of the deal.
