News in over the weekend was that Digital Signage Software vendor (and Digital Signage Solutions provider) Symon Communications, Inc. was to be acquired.
This deal, first mooted back in October in New York we believe, has been very quick in actually getting this far (though there’s a very good reason for that which we will come to a bit later).
The announcement, which came out over PRNewswire, stated that Nasdaq Capital Market listed company SCG Financial Acquisition Corp. (NasdaqCM: SCGQ) had issued an Equity Commitment Letter And Non-Binding Letter Of Intent with Symon Communications, Inc.
Let’s first do some backstory on Symon Communications, Inc. before taking a look at the other parties in the intended transactions…
- It’s been common knowledge for a couple of years that Golden Gate Capital, who became the major shareholder in Symon Communications, Inc. in 2005 have wanted to sell / get out of the investment. We wrote ‘Golden Gate Capital Aims To Sell Symon‘ back in September 2010
- Thanks to Symon CEO Charles Ansley Symon Communications, Inc. is one of the most profitable businesses in the digital signage sector
- As “The value in Symon is that they have consistently worked to build recurring revenue streams” it should be no surprise that they are the first big digital signage software vendor to be properly acquired (this is not the seemingly ‘normal’ distress sale or anything of the sort)
- Whilst Symon has done really well, it could do better. It, of course, primarily focusses on the call centre and employee communication space and it has missed out in other vertical sectors where its depth and strength, and being global could have really given it an edge
Who is SCG Financial Acquisition Corp.?
Well, a bit of ‘Google research’ reveals that they are effectively a bunch of forty-something investors who raised a ton of money (USD 80 million to be precise) and created a Special purpose acquisition company (Ken Goldberg has a good explanation of SPAC and his take on the entire deal here). That pot of money came with some provisos – one of them being a ticking time bomb – spend it or lose it! And that deadline to spend is fast approaching
Hence, as anyone who ever got a sniff of this deal will tell you, is why it has and will continue to happen so fast! Expect even more announcements in January 2013.
What of RMG Networks?
We’ve stood up at more than one Investor Conference and stated that RMG Networks would be the first in our industry to IPO and whilst that that won’t happen now, RMG Networks are getting a NASDAQ listing by effectively merging with SCG.
In terms of that ‘merger’, there is so much brand equity in RMG that we’d fully expect the NASDAQ entity to change its name at some point soon.
Now, whilst some pundits might say that RMG and a ‘Call Centre’ digital signage software vendor make strange bed fellows we see this as an incredibly good marriage of strengths.
Let’s look at RMG Networks:-
- RMG Networks has two blueblood investors on board; Kleiner Perkins Caufield Byers and National Cinemedia
- Whilst RMG has a great reputation it has taken them longer than it probably should have to get anywhere (Garry explained some of the company’s early issues at this year’s Investor Conference)
- RMG hasn’t really been able to capitalise and take a dominant leading position
- RMG continues to have great potential but probably needs more access to capital
However, RMG’s investors are very clever folks and they have architected a deal whereby (a) RMG gets a public listing (which will let them more easily raise additional funds) (b) they purchase one of the most profitable software vendors in our industry and (c) sets the scene for even more acquisitions in the months ahead.
All of this is going to make the early part of 2013 incredibly interesting for the industry.