Endurance International Group Holdings Inc. announced today that it will be acquired by private-equity firm Clearlake Capital Group L.P.. The all-cash deal is valued at $3 billion, including debt.
For those unfamiliar, Endurance has a cloud platform that consists of an expanding suite of products that help SMBs establish and optimize online presence. This includes a website builder and hosting product, as well as adjacent functions that continue to expand — per our ongoing Website Windup series.
That includes eCommerce and various flavors of outbound marketing. Endurance brands include Constant Contact, Bluehost, HostGator, and Domain.com. Over the past decade, Endurance has grown into an SMB services powerhouse, now serving about 5 million businesses worldwide and employing 3,800 people.
Operationally, Endurance will now be subject to Clearlake’s O.P.S. framework, which is the firm’s proprietary system for achieving operational efficiencies, pursuant to greater margins and overall valuation (typical private-equity playbook). Clearlake currently has about $25 billion in assets under management.
“We are pleased with this agreement, which recognizes the value of our multi-brand scale platform,” an Endurance International spokesperson told Localogy Insider. “Our team remains committed to increasing the value we deliver to our customers.”
Pattern Matching
Panning back, We have an ongoing prediction about feature expansion and M&A activity in the website space. There are untapped synergies between websites and other areas like eCommerce, SEO and CRM. Feature expansion can achieve economies of scale, greater ARPU and deeper SMB relationships.
As we wrote in December.
Website Builders Continue to Broaden Functionality: As the website sector in general matures, there’s less growth so competition intensifies for market share. The result is a spate of moves in the past six months to beef up their bundle of services with more functionality to attract customers and reduce churn. This has ratcheted up as website builders like GoDaddy, Automattic and others are rapidly expanding (though building and buying) to offer marketing and promotion, in addition to the core “presence” functionality of websites. That will continue into 2020, with feature expansion that most prominently includes email marketing, SEO and CRM.
Today’s acquisition sort of aligns with this trend, as private equity firms are typically driven to find such synergies to boost key metrics like retention and ARPU. Broader product bundles can work towards both ends in terms of depending SMB ties. We’ll be watching closely to see if that’s indeed the intention here.
As for the terms of the deal, Clearlake will pay $9.50 for outstanding Endurance shares — a 63.5 premium on the stock’s Friday closing price of $5.81. The acquisition is expected to close in the first quarter of 2021, subject to Endurance shareholder approval, closing conditions, and antitrust regulatory clearance.
This is the latest in Localogy’s Website Windup series. It examines the ongoing evolution and advancement of SMB-focused website builders, including acquisitions and feature expansion to enhance product bundles.
