Stuffed Drupal-logo heads on a TV-stand post at Acquia Engage.
Drupal swag at Acquia Engage in 2017. PHOTO: Dom Nicastro

Vista Equity Partners made another billion-dollar acquisition of a digital experience software provider this week, acquiring Boston-based Acquia for $1 billion. Vista acquired Marketo in 2016 for $1.79 billion then sold Marketo to Adobe for $4.75 billion two years later. Acquia made the announcement Tuesday.

The acquisition marks another major private equity investment in the digital experience software space. Since 2016, investors have acquired more than $5 billion worth of such technology companies, more than half ($2.79 billion) coming from Vista's two acquisitions. The other two major acquisitions include:

  • April 2016: EQT acquires Sitecore for $1.14 billion.
  • Sept. 2018: Insight Venture Partners acquires Episerver for $1.16 billion.

CMO: Validation of the Market

"It's a great validation of the market, a great validation of the space, and the growth that's going to take place in the space," Lynne Capozzi, Acquia's chief marketing officer, told CMSWire in an interview Wednesday morning. "In the whole digital experience platform area, it just says that there's lots of market validation behind it. And collectively, we know how big the market's going to grow to. And we're seeing it everywhere. We're recipients of that right now."

Acquia stands out in its billion-dollar competitors because its Digital Experience Platform (DXP) is built on open-source software through Drupal, the content management system that powers 1.27% of the world's websites (ninth most of all CMSes). "I think that open source is becoming mainstream," Capozzi said. "We're there. We've crossed that mainstream line. There's a lot of validation in open source. We see large corporations like Citigroup who's making open source decisions. 10 years ago, that didn't happen. It's now almost a check-off. Are you open source? Great, we need that. We want that."

Vista Playbook: Acquisition Coming Soon?

The elephant in this Vista acquisition room is Adobe's acquisition of Marketo. It took Vista Equity Partners two years to turn a swift $3 billion profit on Marketo after it acquired the marketing automation provider for $1.79 billion in 2016. Adobe's $4.75 billion acquisition of Marketo in 2018 marked one of the biggest martech-to-martech acquisitions.

Will Acquia be acquired just like Marketo? Of course that's an option. Capozzi said no options are off the table, including a future IPO. "As far as Acquia is concerned, I am not sure there are suitable buyers out there for them," said Ali Alkhafaji, chief technology officer for TA Digital who's worked on implementing multiple DXP technologies. "They are a clear leader within the content space but their size (about 1,000 employees), stack, domain are not inline with any of the big DXPs who are missing a content solution. This might be a case of Vista making some changes to reduce cost and increase revenue to reap the benefits or perhaps sell it to another venture or equity firm."

Alkhafaji noted EQT is still waiting on Salesforce to come knocking to buy Sitecore so Salesforce can "finally compete with Adobe on the content side." Insight Venture Partners (Episerver's acquirer) is probably hoping for an acquisition of Episerver from Microsoft, he added. "Now whether those two buyouts happen or not," Alkhafaji said, "that is still an open question but growth in this market is largest when you are a complete DXP like Adobe, Salesforce and SAP or you are a niche player like Shopify, BigCommerce, Contentful, etc. Companies in the middle always seem to get squeezed from both sides."

Immediate Steps for Acquia

Marketo saw a huge executive shakeup after its Vista acquisition. Acquia for now is operating independently. Dries Buytaert, creator of Drupal, founder of Acquia and now chairman and CTO, noted in a blog post Tuesday Vista now owns more than 50 percent of the company but that Acquia's mission remains the same: "help our customers and partners build amazing digital experiences by offering them the best digital experience platform."

Robert F. Smith, founder, chairman and CEO of Vista, said in a statement Acquia gives back to the open source community and is "well-positioned to capitalize on the tremendous opportunity in the DXP marketplace."

Vista's acquisition buys out Acquia's initial investors, Buytaert noted, citing North Bridge Venture Partners, Underscore and Sigma Prima Ventures. Early investors "made a big bet on me — at the time, a college student living in Belgium when Open Source was everything but mainstream."