Thryv Holdings, which recently went public via a direct listing, hopes to add 2.3 million Australian small businesses to its total addressable market with its proposed acquisition of Sensis. Thryv announced today that it is “in discussions” to acquire the Australian print and online directory publisher and digital solutions provider.
To be clear, the deal hasn’t been completed. Thryv did not disclose any terms.
To be sure, it isn’t surprising to us that Thryv is on the acquisition trail. After all, the company is the product of multiple acquisitions. The choice of Sensis initially hit us as a surprise. There are certainly other logical targets — Yellow Pages Canada just to name one — that are many fewer time zones away.
But in many ways, the deal does make sense. First of all, Sensis is owned by California-based Platinum Equity, which acquired a controlling stake in the company from Telstra in 2014. Six years is a relatively long holding period for a private equity firm. So it makes sense that Platinum would be looking for an exit.
The companies also have complementary products. Thryv’s strategy is built around its CRM-based business management suite.
Bringing the Cloud to the ‘Unclouded’
We reached out to Thryv CEO Joe Walsh today to ask why Sensis and why now.
“Small businesses around the world are discovering that they can run their businesses smarter using modern, cloud-based software,” Joe told Localogy Insider. “At Thryv, we seek to bring cloud-based solutions to ‘unclouded’ SMBs, meaning those who have yet to adopt cloud-based software. And the potential Sensis acquisition represents an extraordinary opportunity to do that. Sensis is a highly respected national player that has long helped Australia’s small businesses to market themselves successfully. And now Sensis will be there to help Australia’s small businesses fully embrace the digital revolution.”
Walsh continued: “We are confident that working with CEO John Allan and his seasoned and savvy management team, we will be able to build on our long-established track record of doing accretive acquisitions that deliver outstanding results for our investors.”
Sensis, also a company with print Yellow Pages in its heritage, is now focused on delivering a suite of digital marketing solutions to Australia’s SMBs. It’s easy to imagine adding the Thryv platform to Sensis’s existing product mix.
The Value of SaaS Dollars
Thryv’s primary motivation, as Joe suggests in his comments, appears to be to acquire new customers for its SaaS business. Investors value a SaaS dollar higher than an ad-based dollar. Perhaps 10X. Sensis reports having 100,000 customers. Imagine if Thryv is able to convert 20,000 of those customers into the SaaS platform at an LTV of $7,500? That equates to about three years of Thryv for many SMBs. That scenario could add in the range of $1.5 billion to Thryv’s valuation.
Today, Thryv generates about 10% of its total revenue from Saas, according to its recent S-1. However, it’s arguably Thryv’s most valuable revenue. And SaaS is clearly the strategic core of the business. And every Sensis customer that Thryv converts into a SaaS customer is a win for Thryv’s investors.
Of course, we will wait and see what Thryv’s plans are for Sensis. That is, assuming the deal closes. And we imagine it will.