And Now The Fun Begins 4YCnario

We won’t go on that we told you this would happen back in September (oh! okay we will, click here ^[1]) but YCD finally got to announce the acquisition of C-nario ^[2].

^[3]Ok, so it wasn’t exactly a merger as we said but we doubt if there was much left of C-nario to actually ‘merge’ with. All the talk from C-nario’s most recent CEO, Tamir Ginat of forming a ‘dream team earlier this year’ ^[4] came to nought – he was a new broom that swept clean and managed (we think) to get rid of all the good C-nario staff that they had (and lost his job to boot as well).

Whilst C-nario have some really nice high end retail customers (and don’t forget the one that they are not allowed to talk about – the Microsoft Stores) they no longer have JCDecaux as a big (or potentially big customer) now that all that business has gone to BroadSign.

We always found C-nario incredibly difficult to work with, the product was good but hard to get to grips with and their employees intolerably ‘always right’ and ‘would never listen’. YCD are pretty excellent at retail – we love their retail merchandising tools built into their system but the suspicion is always that their retail rollouts are nothing more than pilots in and around NYC.

But just because YCD and C-nario both have lots of retail customers doesn’t necessarily make them good bed fellows. We have done a lot of ‘software roll-up’ strategy work for investors and in 90% of the cases we looked at, we couldn’t recommend it as a strategy going forward.

• Ostensibly you have two software platforms. Two software platforms that used to compete (as well). How do you merge them? Do you merge them? If you merge them or ditch one what will keep the customers you already have (on one platform)? After all, your customers bought said product because they liked it and evaluated it over others.
• If you tell your customer the software platform will change they will more than likely use that as an excuse to broaden any thought of ‘change’ and go evaluate what else (new) is on the market – obviously risking the chance of the customer switching away from either of your platforms.
• The strange thing about our software industry is that whilst all bits of digital signage software do the same thing they are all so very different in architecture and usually there is little synergy between platforms.

Whilst many will see this acquisition as a continuation of the consolidation of the (software) industry (which, in part it is) this is more likely, as we hinted at back in September, dozens and dozens of YCD shareholders and a dozen C-nario shareholders simply trying to cut their losses and make the most of their substantial investments to date.

If YCD had the money (I’m not sure I believe any of the figures about USD 6 Million in new investment) and were really keen on growth by acquisition there are plenty of better / more synergistic companies that they could have bought or merged with.

C-nario were probably in bad shape, easy to acquire with stock and the joint shareholdings cemented this deal.