Merkle Will Spend $1 Billion on Acquisitions in Next Five Years
Merkle may be much smaller than its competitors, but the firm is preparing for a growth spurt. The privately held marketing data-services company has set aside $1 billion for acquisitions over the next five years and plans two of those purchases in the next three to four months.
"What we would acquire are technology-enabled services businesses. That's what we like," said Merkle CEO David Williams in an interview with Ad Age earlier this week about the company's long-term plans. "We've actually earmarked about $1 billion in capital to spend on acquisitions in the next five years."
Mr. Williams said he's shooting for companies that would help Merkle address needs for mid-funnel marketing. That could result in purchases of companies that enable emerging digital efforts like native advertising and video, he said.
Merkle focuses on performance-driven marketing services such as dynamic display ads and digital CRM communications. The company is approaching 3,000 employees and brought in around $400 million in revenue last year. It hopes to hit $500 million in revenue this year.
Earlier this month the company bought Seattle-based Pointmarc, a data architecture and engineering firm which Merkle said has a strong relationship with Adobe. Other recent acquisitions include digital and direct agency New Control and loyalty firm 500friends.
"We're interested in building one integrated company," Mr. Williams said, stressing the firm's approach is to fold acquisitions into the Merkle brand rather than becoming a parent to a portfolio of separate companies.
Merkle also has its sights set across the Atlantic, where it would like to add 250 or 300 employees in Europe to its small London-based team of 20. "It's really about establishing a beachhead in London," said Mr. Williams. The Asia-Pacific area and Latin America are also regions of interest. The company already has around 400 people on staff in Asia.
Where will the money for future acquisitions come from? "We have a strong balance sheet," said Mr. Williams, noting the firm will also derive funds through lines of credit and private equity.
Industry observers suggest Merkle has been successful at integrating its acquisitions thus far, yet the influx of additional companies could put its approach to the test. According to Mr. Williams, the firm evaluates whether potential acquisitions will fit into the Merkle culture before buying, and ensures managers and staff have a degree of decision-making autonomy.
"We don't like rules at Merkle," he said.