On January 24, 2024, MediaValet Inc. (TSX: MVP), a provider of Digital Asset Management (DAM) solutions, announced its acquisition by an affiliate of STG Partners, a private equity firm known for its investments in technology companies.
The all-cash transaction emphasizes the critical role of DAM solutions in today’s content-driven business environment and the growing appeal of Software-as-a-Service (SaaS) business models, with their recurring revenue subscriptions that enhance revenue predictability.
This acquisition is part of a series of investments by private equity in Canadian technology firms, including notable transactions in 2023 such as Crosspoint Capital Partners’ acquisition of Absolute Software ($867.6 million), Caisse de Dépôt’s purchase of H2O Innovation ($460.9 million), Sumeru Equity Partners’ acquisition of Q4 ($225.4 million), and Impactreneur Capital’s acquisition of BBTV Holdings ($28.5 million).
Additionally, Fairfax Financial (TSX: FFH) recently proposed an increased bid for Farmers Edge (TSX: FDGE), aiming to privatize the company.
Transaction Details
Under the terms of the agreement, STG has agreed to acquire all outstanding shares of MediaValet for $1.71 each, valuing the company at $79 million, or a 5 times (5.0x) multiple of its last twelve months’ revenue (EV/TTM Revenue).
This valuation represents a 30% premium over MediaValet‘s closing share price as of January 23, 2024, and is contingent upon shareholder and customary approvals, with closure expected in the first quarter of 2024.
Implications for the Canadian SaaS and DAM Market
MediaValet‘s acquisition at a 5.0x trailing EV/Revenue multiple is a positive indicator for other Canadian SaaS and DAM companies, suggesting potential upward valuation adjustments for firms like Lightspeed (TSX: LSPD), Sylogist (TSX: SYZ), TrueContext (TSXV: TCXT), Turnium (TSXV: TTGI), and Vitalhub (TSX: VHI), which currently trade below a 5.0x EV/Revenue multiple. (For more information about the Canadian Public Companies focused on M&A, read eResearch’s Industry Report from the following link: eR-Industry_Report-ICT-M&A-2023-10-30-FINAL)
Similarly, DAM provider Data Communications Management (TSX: DCM), with a current trading multiple of 0.9x EV/Revenue, may see valuation benefits as it advances its Print-to-Digital strategy and increases SaaS revenue. (For more information about the DCM, read eResearch’s latest Update Report on DCM from the following link: eR-DCM-2023_11_13_UR-2023-Q3_FINAL)
STG’s Strategic Rationale for the Acquisition
The acquisition by STG is expected to further MediaValet‘s product development and expand its market presence. MediaValet‘s current product offerings and customer-centric approach, combined with STG‘s track record and financial resources, could enhance the DAM solution provider’s ability to deliver enhanced services and support to its clientele.
MediaValet’s board of directors has unanimously recommended that shareholders approve the transaction.
Overview of MediaValet
MediaValet delivers enterprise-grade DAM, video content management, and creative operations software through a cloud-native, SaaS model on Microsoft Azure.
The platform supports organizations in managing, collaborating on, and distributing digital assets throughout the content lifecycle, from creation to distribution. MediaValet serves customers in various industries, such as education, healthcare, manufacturing, retail, and tourism.
MediaValet‘s cloud-based platform is capable of managing various digital media types, including images, videos, documents, and 3D models, and integrates with leading tools such as Adobe Creative Cloud and Microsoft Office 365.
The company reports that it serves more than 500 customers and over 70,000 end users globally, across 61 Microsoft data center regions in 140 countries. Some of the company’s notable clients include Air North, A&W Canada, Canadian Blood Services, and the University of Windsor.
About STG Partners
STG, based in Menlo Park, California, specializes in investments across data, software, and analytics sectors, focusing on strategic value creation and growth facilitation.
The firm’s portfolio includes more than 50 global companies, showcasing its capacity to transform and scale technology-driven businesses.
Final Thoughts
As companies continue to navigate the complexities of digital transformation, the demand for efficient, secure, and scalable DAM solutions is expected to rise.
The acquisition of MediaValet by STG highlights the increasing value of DAM solutions in today’s content-driven business environment.
This deal also reflects broader trends in the technology sector, where strategic investments play a crucial role in driving innovation and growth within niche markets.
FIGURE 1: Canadian SaaS and DAM Comps
Source: S&P Capital IQ (data); eResearch (formatting & calculations)
Notes: All numbers in CAD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.
On January 24, 2024, MediaValet Inc. (TSX: MVP), a provider of Digital Asset Management (DAM) solutions, announced its acquisition by an affiliate of STG Partners, a private equity firm known for its investments in technology companies.
The all-cash transaction emphasizes the critical role of DAM solutions in today’s content-driven business environment and the growing appeal of Software-as-a-Service (SaaS) business models, with their recurring revenue subscriptions that enhance revenue predictability.
This acquisition is part of a series of investments by private equity in Canadian technology firms, including notable transactions in 2023 such as Crosspoint Capital Partners’ acquisition of Absolute Software ($867.6 million), Caisse de Dépôt’s purchase of H2O Innovation ($460.9 million), Sumeru Equity Partners’ acquisition of Q4 ($225.4 million), and Impactreneur Capital’s acquisition of BBTV Holdings ($28.5 million).
Additionally, Fairfax Financial (TSX: FFH) recently proposed an increased bid for Farmers Edge (TSX: FDGE), aiming to privatize the company.
Transaction Details
Under the terms of the agreement, STG has agreed to acquire all outstanding shares of MediaValet for $1.71 each, valuing the company at $79 million, or a 5 times (5.0x) multiple of its last twelve months’ revenue (EV/TTM Revenue).
This valuation represents a 30% premium over MediaValet’s closing share price as of January 23, 2024, and is contingent upon shareholder and customary approvals, with closure expected in the first quarter of 2024.
Implications for the Canadian SaaS and DAM Market
MediaValet’s acquisition at a 5.0x trailing EV/Revenue multiple is a positive indicator for other Canadian SaaS and DAM companies, suggesting potential upward valuation adjustments for firms like Lightspeed (TSX: LSPD), Sylogist (TSX: SYZ), TrueContext (TSXV: TCXT), Turnium (TSXV: TTGI), and Vitalhub (TSX: VHI), which currently trade below a 5.0x EV/Revenue multiple. (For more information about the Canadian Public Companies focused on M&A, read eResearch’s Industry Report from the following link: eR-Industry_Report-ICT-M&A-2023-10-30-FINAL)
Similarly, DAM provider Data Communications Management (TSX: DCM), with a current trading multiple of 0.9x EV/Revenue, may see valuation benefits as it advances its Print-to-Digital strategy and increases SaaS revenue. (For more information about the DCM, read eResearch’s latest Update Report on DCM from the following link: eR-DCM-2023_11_13_UR-2023-Q3_FINAL)