Here Are the Top 5 Exits in Local Tech of 2014
The local technology industry saw plenty of M&A activity in 2014 and remains poised for another busy year as established firms look to stay on top and a new batch of public companies come into capital. The largest exits came on the public market where some of the more established firms found late exits and others teamed up with rivals.
The startup scene saw its share of healthy — if not billion-dollar — exits as well. Public firms such as Yelp, Yahoo, Intuit as well as private companies such as Square, GoDaddy, Yext all bought companies in the local space.
Here’s a recap of the five biggest exits in the local tech industry during 2014.
At $5.2 billion, Oracle’s buy of Micros was the largest deal of the year. The maker of retail and restaurant software was under pressure from a deluge of new competitors thanks to a shift toward a cloud computing model, and a sale to Oracle was probably the best decision for its investors.
Many believe a shift to cloud computing could kill Micros. The legacy model is based on what’s called on-premise software — meaning the data is processed, analyzed and stored in servers at the business itself. It’s a closed system, so to speak. In addition to the product capabilities of these new competitors, the cloud also deeply affects the business model. A huge percentage of Micros’ revenue — more than half — comes from maintenance and installations cost that are almost non-existent when the software is run remotely.
There’s so much in the OpenTable deal, it’s hard to know where to start. In June, travel giant Priceline acquired the restaurant reservation company, which went public in 2009, for $2.6 billion after a long negotiation. It’s a well-deserved exit for a company that was so far ahead of its time that a decade-and-a-half after its founding, startups are still trying to build relatively similar products.
But the deal also offers an early look into a logic that could drive a more comprehensive consolidation of the travel and local technology sectors. The growth of a slew nationally-scaled services that help us explore and interact with cities in previously unforeseen ways means that many of the structures built to help visitors navigate new cities — and implicitly for marketers to reach tourists — might quickly become obsolete.
The real estate software industry may do something it hasn’t in years: change. And the Trulia-Zillow tie-up was undoubtedly an effort to preempt the competition. The deal, which saw Zillow buy Trulia for $3.5 billion in stock, will reduce an immense amount of redundancy between the two firms and, maybe, create enough momentum to actually change the backwards way real estate is bought and sold in the U.S.
Trulia and Zillow built big businesses by ingratiating themselves with realtors and with multiple listings services, which covet listings data. That’s why the process of searching for an apartment or buying a home feels much the same as it did a decade ago. Now, a handful of new startups want to build models that circumvent the existing structures, and thus posing a threat to the two companies.
In September, SK Telecom, the Korean wireless giant, agreed to acquire loyalty app Shopkick in a deal worth upwards of $200 million. Shopkick was one of the few loyalty companies to build a meaningful consumer audience, using audio and eventually bluetooth to allow large retailers including Macy’s to offer a unique shopping experience that spanned from the couch to the store.
The acquisition was the first meaningful exit for the group of companies building a companion application for the in-store retail experience. With ecommerce sales growing, retailers are scuttling to find a better way to put their brick-and-mortar locations to work.
Square made its largest acquisition to date this fall with the acquisition of Caviar, a food delivery service. Rumored at $90 million, the deal will help the company monetize the network of merchants who use the company’s software to run their business.
Steven Jacobs is Street Fight’s deputy editor.