STRATACACHE announced today a $25 million acquisition fund targeting technology and media companies in the digital signage/digital out-of-home (OOH) media marketplace.Our take:"Although the out-of-home advertising segment is one of the fastest growing segments in the industry, tightening advertising budgets worldwide are putting increased pressure on many early stage companies in the marketplace," says STRATACACHE CEO Chris Riegel. "Many venture-backed or privately held companies with considerable potential were expecting unrealistic growth in the short term and are now running into significant financial difficulty."
STRATACACHE's strong merger and acquisition (M&A) team has demonstrated success through multiple acquisitions within the past five years. Opportunity exists for further growth in this sector for companies with strong management and healthy balance sheets.
Stratacache is right about one thing -- there are a lot of companies out there who expected to jump in, make a quick buck, and get sold or acquired. We can imagine that some portion of these were even able to raise a bit of venture capital based on this "plan". The truth, of course, has been more harsh than expected, even for experienced companies with good operating cash flows. While there might be a few good small companies with revenues low enough to be acquirable for less than $25M (since presumably Stratacache wants to spread that money around and make a few acquisitions), we wonder how much synergistic technology they'll be able to get this way. And forget about new customers.
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