SALE of Syncapse Corp, its Assets & Intellectual Property
Gerbsman Partners – http://gerbsmanpartners.com – has been retained by MNP Ltd., in its capacity as Court-appointed receiver (the “Receiver”) of the property, assets and undertakings of Syncapse Corp. (“Syncapse”, or the “Company”) (http://syncapse.com), to solicit interest for the acquisition of Syncapse’s intellectual property (the “Syncapse Assets”).
Headquartered in Toronto, Canada and with offices in New York City, London and India, Syncapse is a provider of technology-enabled social performance management services for global, enterprise clients with multiple B2C brands.
In July 2012, the Company acquired the assets of Clickable, Inc., as well as its India subsidiary (together, “Clickable”), a leading search and social media ad tech company, with approximately $32 million raised. This added a deep expertise in digital paid advertising, and a skilled, cost-effective R&D and support team based in Gurgaon, India.
Syncapse derives revenue from 3 related lines of business: SaaS subscriptions, Ads and media solutions, and consulting services.
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IMPORTANT LEGAL NOTICE:
The information in this memorandum does not constitute the whole or any part of an offer or a contract, nor does it purport to contain all information that may be required or relevant to a recipient’s evaluation of any transaction and recipients will be responsible for conducting their own investigations and analysis.
The information contained in this memorandum relating to the Syncapse Assets has been supplied by Syncapse. It has not been independently investigated or verified by the Receiver, Gerbsman Partners, their agents or any other party.
Potential purchasers should not rely on any information contained in this memorandum or provided by the Reciever, Syncapse or Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.
The Receiver, Syncapse and Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, completeness and reasonableness of any information provided in connection herewith and (ii) do not accept liability for the information provided in connection herewith, including information contained in this memorandum, whether that liability arises by reasons of the Receiver’s, Syncapse’s or Gerbsman Partners’ negligence or otherwise, except liability that arises by reason of the Receiver’s gross negligence or willful misconduct.
Any sale of the Syncapse Assets will be made on an “as-is, where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of the Receiver, Syncapse and Gerbsman Partners. Without limiting the generality of the foregoing, the Receiver, Syncapse and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Syncapse Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.
Except as otherwise noted, this memorandum speaks as of the date hereof. The delivery of this memorandum should not and does not create any implication that there has been no change in the business and affairs of Syncapse since such date. Neither the Receiver, Syncapse or Gerbsman Partners, or their respective staff, agents and attorneys, undertakes any obligation to update any information contained herein.
This memorandum contains confidential information and is not to be supplied to any person without the Receiver’s prior consent. This memorandum and the information contained herein are subject to the non-disclosure agreement attached hereto as Exhibit A.
SUMMARY OF HISTORICAL INFORMATION
Syncapse provided technology-enabled social performance management solutions for global, enterprise clients with large brand portfolios. The Company operationalized and scaled social media efforts through its cloud-based, Syncapse Platform, a unified suite of on-demand tools and applications. Key elements of Syncapse’s Platform include: publishing & collaboration, social & search ad management technology, the SocialSYNC™ data management store, and the extensible and customizable Syncapse Analytics Suite. Leveraging this proprietary technology, the Company also offered a robust set of consulting and data services designed to meet the complex requirements required by global brands. Together, Syncapse’s capabilities enabled clients to build brand health and drive incremental reach, frequency, and effectiveness with minimal marketing investment, while delivering a consistent, coordinated customer experience across multiple social media outlets.
Syncapse offered enterprise brands a fully integrated, SaaS-based, social performance management solution which combines paid, earned, and owned media. Syncapse’s comprehensive, unified platform enabled marketers to manage campaigns across all brands, geographies, and social media channels, and is the best solution to bridge the gap between marketing and IT requirements. Syncapse powered the world’s largest multinational corporations including Anheuser Busch-InBev, Alticor Inc. (Amway), The Coca-Cola Company, Diageo PLC, JPMorgan Chase Bank, Johnson & Johnson Limited and L’Oreal Canada Inc..
Syncapse was headquartered in Toronto, Canada with an R&D and support center in Gurgaon, India, and offices in New York and London.
Target Market:
Syncapse was positioned to benefit from accelerating growth in marketing technology budgets and the continuing migration of the social conversation to the C-suite. With the explosive adoption of social platforms like Facebook, Twitter, YouTube, and LinkedIn, social media has become one of the fastest growing segments of digital marketing today, with estimated market size expected to reach $16Bn by 2016[1]. According to Altimeter Group, Global corporations are struggling to manage an average of 178 business-related social media accounts, along with a host of potential legal, compliance, and brand perception risks. Further, use of social media has transformed from simple marketing tactics to sophisticated enterprise-wide strategic initiatives, creating IT challenges involving data, analytics, content management, security, and consumer privacy protection. As a result, global brands are accelerating growth of marketing technology budgets.
Recurring revenue model:
Syncapse generated revenue from three revenue streams: recurring subscription-based software licenses, support and consulting services, a large percentage of which was typically retained and recurring and media and advertising (self-serve and managed).
Customers:
Syncapse’s strong customer base included blue-chip customers such as Anheuser Busch-InBev, Alticor Inc. (Amway), The Coca-Cola Company, Diageo PLC, JPMorgan Chase Bank, Johnson & Johnson Limited and L’Oreal Canada Inc., among others.
In addition to its enterprise customer base, the company had approximately 100 small and medium business clients that use Syncapse Ads, either on a self-serve or managed services basis.
Proprietary, scalable technology platform that leverages the Company’s industry-leading analytics capabilities.
Syncapse had pursued a client-centric approach to build technology and infrastructure that accepts third-party data integration, created meaningful data visualization and analytics, and enabled efficient, collaborative, global publishing. Following the acquisition of Clickable in July 2012, the Syncapse platform functioned across paid, owned, and earned media – mission-critical in today’s social media marketplace. New platform enhancements also helped global marketers aggregate, normalize, and optimize social data and insights across media channels, brands, and markets. Syncapse had 3 out of 4 Facebook Preferred Marketing Developer badges, and submitted for the 4th, which will put the Company in the elite position of being one of two developers with all four (joining Adobe).
Intellectual Property
Syncapse generated a substantial body of intellectual property in the form of production software (source code, testing tools, APIs), trademarks, and know-how, including familiarity with all relevant social media platform APIs. Details of the Company’s IP (patent filings, trademarks and software) are set out in Appendix B.
THE FOLLOWING FINANCIAL DATA IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY. PAST PERFORMANCE MAY NOT BE INDICATIVE OF FUTURE RESULTS. THIS INFORMATION SHOULD NOT BE RELIED UPON TO MAKE FUTURE PERFORMANCE PROJECTIONS OF ANY KIND. (historical financial data to be supplied upon request for a sales letter by qualified interested partie
The reasons why Syncapse’s assets are attractive are:
Syncapse has historically experienced strong, underlying growth and has been the leader in the field of social media technology and services for the past 5 years. However, recent working capital constraints and an overly leveraged balance sheet have created the opportunity for the sale of the Syncapse Assets. The acquisition of the Syncapse Assets can enable the purchaser to realize significant short and long term value from exploitation of the subject intellectual property.
· Enterprise-Class Technology – Syncapse’s products were developed with direct input from some of the world’s largest marketers, including The Coca-Cola Company (Syncapse Platform), Alticor Inc. (Amway) (Syncapse Franchise edition) and Anheuser-Busch InBev (Syncapse dashboard and analytics), and were running in production for these clients and more.
· Low-cost, highly skilled R&D organization – Syncapse’s R&D and support, were centered in Gurgaon, India, which is a rapidly growing high-tech suburb of New Delhi. Previously with approximately 80 employees, and an average annual salary cost of $27,000, Syncapse India was a cost-effective, scalable R&D and support centre. The team averaged 4.6 years of work experience, 28 years of age, 2 years of tenure with the company, with >50% of the product development team graduating from Tier 1 schools in India.
· R&D Investment: Syncapse invested over $25 million in R&D, with Clickable having invested approximately a further $11 million in R&D prior to its acquisition by Syncapse. This combined R&D investment, of approximately $36 million, resulted in mature, production SaaS platforms, tools and test suites that were the result of hundreds of man-years of software development.
· Robust Growth: Syncapse’s revenue was historically heavily concentrated with RIM/Blackberry, which accounted for as much as 89% of the company’s revenue in 2009, but <10% in FY2013. As RIM reduced its marketing spending, due to its own market challenges, Syncapse had to backfill the decline in RIM revenue with other enterprise clients. While top-line revenue growth appears flat and net income performance has been volatile, the Company had underlying, year-over-year growth, ex-RIM, with the addition of major enterprise clients during periods of significant investment in product development.
· Attractive Industry – Digital advertising and marketing, and social media in particular, is growing at a rapid rate, as companies continue to shift marketing budgets away from traditional media to new, consumer-direct relationships. With the explosive adoption of social platforms like Facebook, Twitter, YouTube, and LinkedIn, social media has become one of the fastest growing segments of digital marketing today, with estimated market size expected to reach $16Bn by 2016[2]. According to Altimeter Group, Global corporations are struggling to manage an average of 178 business-related social media accounts, along with a host of potential legal, compliance, and brand perception risks. Further, use of social media has transformed from simple marketing tactics to sophisticated enterprise-wide strategic initiatives, creating IT challenges involving data, analytics, content management, security, and consumer privacy protection. As a result, global brands are accelerating growth of marketing technology budgets.
· Diversified Base of Customers – Syncapse’s customer base is comprised of some of the world’s largest B2C brand marketers across a range of industries. The list includes: Anheuser Busch-InBev, Alticor Inc. (Amway), The Coca-Cola Company, Diageo PLC, JPMorgan Chase Bank, Johnson & Johnson Limited and L’Oreal Canada Inc., among others,
· Excellent Relationships – Syncapse’s strength was predicated on strong relationships within and outside the social media industry. Syncapse achieved 3 out of 4 Facebook Preferred Marketing Developer certifications (only one company, Adobe, has achieved all 4), and had senior level relationships across Facebook, Twitter, LinkedIn, Google, and other major players in the social media space.
· Opportunity for Future Growth – Opportunities for growth can be realized by fully exploiting the global nature of the client contracts that are in place (Master Services Agreements, SaaS Platform Licensing Agreements) by taking advantage of the existing client base, and selling into local and regional client groups and new business development of the SaaS applications running in production.
· Market Position: Syncapse was a significant enterprise-focused, social media company in a group that included Adobe, Oracle and Salesforce, each of which had added similar capabilities via acquisition. While Syncapse was not the biggest of the group, it had the advantage of being one of the first entrants into this early-stage market, and an exceptionally strong reputation for providing a combination of social media and data solutions to global enterprise clients.
· Corporate Agreements in Place: The Company’s Master Services Agreements and/or SaaS License Agreements are in place with the following companies: Anheuser-Busch InBev; Alticor (Amway); Diageo PLC; Goodyear Dunlop Tires Operations S.A.; Johnson & Johnson Limited; JP Morgan Chase Bank; L’Oreal Canada Inc.; Reckitts Benckiser Corporate Services Limited; The Coca-Cola Company, and several smaller entities.
[1] Forrester Group
[2] Forrester Group
The Bidding Process for Interested Buyers
Interested and qualified parties will be required to sign a Non-Disclosure Agreement (attached hereto as Attachment A) to have access to certain members of management and intellectual capital teams and the due diligence “war room” documentation (“Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it acknowledges and agrees to the bidding procedures described herein; (ii) that it has had an opportunity to inspect and examine the Syncapse Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of the Receiver, Syncapse or Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and the Receiver, Syncapse and Gerbsman Partners (and their respective staff, agents, or attorneys) do not make any representations and warranties whatsoever as to the accuracy or completeness of the same.
Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of all or part of the Syncapse Assets. Each sealed bid must be submitted so that it is received by the Receiver no later than Friday, August 16, 2013 at 12:00pm Toronto Time (the “Bid Deadline”) at the Receiver’s office, located at 300-111 Richmond Street West , Toronto, ON CANADA M5H 2G4. Please also email steve@gerbsmanpartners.com with any bid. For additional information regarding bid requirements and considerations, please contact Steve Gerbsman at steve@gerbsmanpartners.com.
Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase. All bids must be accompanied by a refundable deposit in the amount of 15% of the offer amount (payable to the Receiver, in trust). The deposit must be wired to the Receiver’s account in advance (information will be provided), or paid by certified cheque, money order or bank draft drawn on a Canadian bank. The winning bidder will be notified within 3 business days of the Bid Deadline. The deposit will be held in trust by the Receiver. Unsuccessful bidders will have their deposit returned to them within 3 business days of notification that they are an unsuccessful bidder.
The Receiver is free to conduct the sale process as it determines in its sole discretion (including, without limitation, terminating further participation in the process by any party, negotiating with prospective purchasers and entering into an agreement with respect to a sale transaction without prior notice to you or any other person) and any procedures relating to such transaction may be changed at any time without prior notice to you or any other person. For greater certainty, the Receiver reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale. Interested parties should understand that it is expected that the highest and best bid submitted will likely be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.
The Receiver will require the successful bidder to close within 5 days after Court approval of the transaction. The Syncapse Assets will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.
All sales, transfer, and recording taxes, stamp taxes, or other taxes, if any, relating to the sale of the Syncapse Assets shall be the sole responsibility of the successful bidder and shall be paid to the Receiver at the closing of any transaction.
Management Team at Syncapse (for information purposes only):
Michael Scissons, Founder & CEO
Serial entrepreneur, tech enthusiast and social media veteran, Michael is the chairman, founder and CEO of Syncapse. Since its launch in 2007, Syncapse has been firmly rooted in Michael’s passion for developing innovative and accessible technology. It is these beliefs that have enabled Michael to grow Syncapse internationally—spanning the US, Canada, Europe and India—and to serve the world’s largest global brands. An avid writer and sought after industry pundit, Michael regularly contributes to many industry-leading sources including Bloomberg West, Advertising Age and Fast Company.
In 2010, Michael was awarded Ernst & Young’s prestigious Emerging Entrepreneur of the Year award. Before Syncapse, Michael led Facebook media sales in Canada as Director of Facebook Media within the Interpublic network. He worked with pioneering brands to integrate their marketing into Facebook starting in early 2006. Michael graduated from the University of Saskatchewan, where he debuted businesses based on concepts he’d developed since the tender age of six.
Sarah Johnson, SVP Brand Partnerships and Managing Director
Sarah is a member of the Executive Team and leads the Client Solutions consulting group. She has worked on the client and consulting areas of the business, having started her career in marketing at Microsoft and Wyeth Consumer Healthcare, followed by a shift to consulting for a technical marketing firm. Sarah has been with Syncapse from the beginning, supporting our major clients’ successful growth in social media. Sarah is well versed in the challenges associated with social media management, ranging from gaining internal buy-in to setting a coordinated enterprise strategy with regional flexibility and ultimately understanding what drives success. Sarah is based in Toronto. Outside of the office, she loves to travel the globe in search of new adventures.
Sundeep Sahi, SVP Engineering and Managing Director (India)
Sundeep comes to Syncapse from Clickable with extensive software development and management experience, bringing expertise in the Internet, security and distributed technologies. He has held management and technical roles in large companies like Microsoft and Aditi, and start-ups like Talisma and eLiveBooks.
Prior to his time at Clickable, Sundeep worked at Microsoft on a variety of products including Biztalk Server and Distributed Application Server; he was responsible for services design and architecture.
Sundeep has a Bachelor of Technology degree, with Honors in Electrical Engineering, from Kurukshetra University, India.
Fred Rolff, CFO
As CFO, Fred is responsible for managing Syncapse’s growing financial, legal, IT and administration infrastructure, maximizing revenue growth across all markets. Fred’s previous roles include Vice President of Finance at Tremor Media, Vice President and Controller at The Knot, and CFO at both MeMedia Inc. and Sentigen Holding Corp. He also served as Director, Financial Strategy for Rare Medium Group and Supervising Senior Accountant at KPMG, giving him a unique array of finance, accounting, and operating experience.
Applying the wealth of knowledge he has accumulated over the years, Fred ensures that we maximize our investment in the Syncapse product to maintain its world-class quality. Fred holds a Bachelor of Science degree in Accounting from Villanova University and an MBA in Finance from Fordham University.
For additional information
Steven R. Gerbsman – steve@gerbsmanpartners.com
Kenneth Hardesty – ken@gerbsmanpartners.com
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