Mailchimp Inc., one of the largest providers of digital marketing tools as a service, could be acquired in a deal worth $10 billion or more.
Bloomberg reported the news Wednesday afternoon, citing sources familiar with the matter. The sources said Atlanta-based Mailchimp had attracted interest from private equity firms and unnamed “big tech companies.”
Given the asking price of more than $10 billion, which is higher than the valuation of some publicly traded companies, the anonymous tech companies that would be interested in buying Mailchimp likely include some of the biggest players in the software market. of business. However, the sources noted that an acquisition isn’t the only possibility on the horizon. Mailchimp is also reportedly considering selling only a partial stake.
Mailchimp reportedly generated earnings before interest, taxes, depreciation and amortization of $300 million last year. In 2019, the company disclosed that it was on track to reach annual revenues of $700 million. Mailchimp generates revenue by selling cloud services that businesses use to manage email outreach campaigns, design their websites, and perform related marketing tasks.
Unusually for such a large startup, Mailchimp has never raised venture capital funds and is wholly owned by the founders. The company was founded in 2001 at a time when the now crowded market for digital marketing tools had relatively few players.
Mailchimp remained a fairly small operation for several years until 2009 when it decided to launch a free version of its software. The company’s installed base grew to 450,000 users within a year, and by June 2014 it was sending more than 10 billion marketing emails per day to its customers.
Mailchimp’s flagship product is a cloud service of the same name that businesses, especially small and medium-sized businesses, use to send email newsletters to customers. The service not only provides functionality to coordinate the distribution of promotional messages, but also helps businesses with related tasks such as designing newsletters.
Over the years, Mailchimp has expanded into other parts of the marketing software segment. The company provides software that allows online retailers to link its email service to their e-commerce websites and automatically send promotions to customers when they are needed. For new businesses, Mailchimp offers tools they can use to build an online store from scratch as well as launch digital ad campaigns.
It was reported as early as 2019, technology companies and private equity firms had shown interest in buying Mailchimp. The company’s reported valuation of a sale is part of a larger consolidation trend in the email marketing software segment.
One of Mailchimp’s main competitors, SendGrid, was acquired by Twilio Inc. for $2 billion in 2018. More recently, marketing startup MessageBird BV signed a $600 million contract to buy SparkPost Inc., whose platform is used to deliver approximately one-third of commercial email globally.
One of the reasons why Mailchimp could be sold for a sum much higher than the prices charged by its competitors could be its presence in the rapidly growing e-commerce market. Earlier this year, the company disclosed that it has some 14 million customers, 40% of which operate in the e-commerce industry.
For a potential acquirer, Mailchimp’s large installed base of e-commerce companies can present significant opportunities for revenue growth. E-merchants are deploying an increasing number of software tools, product catalog search engines at marketing automation services, to help them generate more sales. In the future, Mailchimp could potentially capture more of this software spending from millions of online retailers by adding more e-commerce tools to its product portfolio.
The company’s growth opportunities in the lucrative e-commerce software segment could partly explain the $10 billion-plus selling price it would seek.