Digital Commerce — Adobe Acquisition of Magento
By Sydney Scadden | October 10, 2018
Digital Commerce — Adobe Acquisition of Magento
In Q2 of 2018, Adobe announced their acquisition of Magento, the world’s #1 e-commerce platform. The addition of the Magento Commerce Cloud will enable commerce to be seamlessly integrated in the Adobe Experience Cloud. The purchase gives Adobe a missing e-commerce platform piece that works in B2B and B2C contexts and should fit nicely in the company’s Experience Cloud.
Magento’s journey in digital commerce began in 2009 and has hosted over 200,000 small, mid-market, and enterprise businesses. Known as the most modern commerce platform built for today’s experiences, Magento offers a one-of-a-kind cloud e-commerce solution for B2C and B2B experiences. Magento services include: B2B Commerce, Omnichannel, Global Expansion, Digital Transformation, Web Design, Shopping Cart, Customer Service, Order Management, Mobile Commerce, Product Management, Search Engine Optimization, Marketing, Analytics and Reports, and multiple websites.
E-commerce has become a requisite for all business categories. Every online business owner looks for a sophisticated e-commerce solution that offers a blend of scalability, flexibility, and extensibility at their fingertips. While there are other leading open-source e-commerce platforms, Magento is widely regarded as the most search-engine-friendly e-commerce platform available in the market.
Magento has partnerships with a community of businesses that assist merchants with Magento Commerce projects. This platform gives the power to create engaging shopping experiences while offering the security, performance, and low TCO benefits of cloud services. The Magento partners to note are as follow:
- Dotmailer — Magento’s first and only Platinum Technology Partner for email marketing automation. Dotmailer is an innovative, user-friendly platform for smarter, faster marketing.
- PayPal — PayPal is a Platinum Technology Partner and delivers a world-class payment platform in a single integration, including a Braintree-powered store together with PayPal Express Checkout.
- Something Digital — SD is a well-established digital agency based in New York and Florida with a national portfolio and award-winning technical, creative, and business capabilities.
- EYStudios — The 2017 Magento Partner of the Year, EYStudios is a premier e-commerce design and development agency that specializes in branding, merchandising, and usability.
There are many other players in the digital commerce space. A few of the major players are depicted in the public basket below:
Gartner also recognized Magento as a leader in digital commerce platforms based on its ability to provide customers with the performance, scalability, and security needed to deliver full-lifecycle customer experiences, no matter the needs or size. This is the second consecutive year Magento has risen as a Leader among other digital commerce platforms.
More on Adobe & Magento and Other Notable M&A Deals:
So how does the Adobe acquisition of Magento impact the ecosystem? Immediately there was a stock market reaction: Shopify’s shares plunged 5% right after the report was released. Since Adobe is a leader in digital experience delivery, Magento partners and their clients will definitely benefit from the acquisition. Magento helps fill the gap in Adobe Experience Cloud offerings, and with the addition of the Magento Ecosystem, the acquisition will present great long-term effects for the pair. The Magento ecosystem’s flexibility and support of customer experiences are key criteria for online success, and once they join forces they will be a powerful duo competing with the best-in-class digital platform vendors for global business. The acquisition is noteworthy as it relates to the partnership ecosystem as well. Service providers will now be interested in Magento services, because they already have Adobe Marketing Cloud or some other integrated service offering.
Other Notable M&A deals:
AEM has been winning the marketing cloud battle — this created an enormous acquisition appetite for AEM solutions providers over the last 36 months. e-commerce is a natural fit with marketing cloud solutions and is an area of the M&A market that is heating up.
- Capgemini strengthens its global leadership in Digital Commerce with Lyons Consulting Group acquisition.
- Wunderman adds to global commerce presence with Gorilla Group acquisition
Over the last 3 years, 7 Mile Advisors has tracked 141 notable M&A transactions in the digital commerce space. Most transactions have been seen originating from Europe and the U.S./Canada regions. (YTD is as of September 17th, 2018.)
There is an exciting future for the digital commerce market. Over the last few decades the market has continued to evolve and experience growth in both developed and developing markets. According to Research and Marketing, the global digital commerce software market is currently growing at a CAGR of 18.16% and is projected to reach USD 12.23 billion by the end of 2022. The effects of the digital commerce market are felt in almost every industry (retail, financial services, travel & tourism, communications, entertainment & media, others) and all over the world (North America, Europe, Asia-Pacific, Latin America, the Middle East & Africa). North America holds the largest market share in this industry, followed by Europe. Digital commerce software continues to be one of the fastest-growing verticals in the overall enterprise applications software market. For more M&A activity in this space, check out our recent Digital Commerce Sectorwatch.
We think Magento partners are likely high priority M&A candidates for those who made investments into the Adobe ecosystem, or those who are looking for their first investment into the ecosystem on a platform that lends itself to recurring services revenue rather than lumpy implementation project work in the Marketing Cloud.
Author: Sydney Larese, Associate at 7 Mile Advisors
About 7 Mile Advisors
7 Mile Advisors provides Investment Banking & Advisory Services to the Business Services & Technology Industries globally. 7 Mile Advisors advises on M&A and private capital transactions, and provides market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, 7 Mile Advisors helps its clients sell companies, raise capital, grow through acquisitions, and evaluate new markets. For more information, including research on the M&A markets, visit www.7mileadvisors.com.