Ektron and EPiServer each announced in the past week that they have taken on "majority investment" by the same private equity firm, California-based Accel-KKR. In other words, they have both been purchased and are now owned by Accel-KKR. While mergers and acquisitions are barely newsworthy in the tech industry these days, this shift in the the .NET Content Management System (CMS) space has caused a certain degree of concern and uncertainty fueled in no small part by rumor and speculation circulating in social media. As a partner with both companies, we felt it was important to address these questions and the impact these purchases will have on current clients as well as the future path each platform may take.
Is this the end of Ektron and/or EPiServer?
Not at all. Tech companies are purchased by private equity investors all the time and continue to function and thrive. Both Ektron and EPiServer have stated that investment by Accel-KKR will allow them to accelerate growth, expand operations, and continue to be leaders in the CMS industry. Product releases and support will continue as usual, and all current implementations will be unaffected. The long term future is still a question at this point, but there is no indication of the impending demise of either platform.
Will Ektron and EPiServer merge?
Now that they share a common owner, this is a very logical assumption and the subject of much speculation. Why would an investment firm buy two competitors if they weren’t interested in consolidating them into a single, stronger company better positioned to dominate the industry? Neither company is willing to state that this is the plan, but they aren’t completely ruling it out either. In many ways, a merger makes sense when you look at each company’s market share. EPiServer has a large European market share, but limited penetration into the U.S. The opposite is true for Ektron. A combined company would be a cross-Atlantic powerhouse with a very large client base and limited competition. The question then shifts to technology. Assuming one platform replaces the other, which one wins out? There are pros and cons either way, with EPiServer having the e-commerce and usability advantage, while Ektron gets the nod for data synchronization capabilities and more flexible content management. But they both have significant overlap in search, marketing, customization, and analytical tools that are harder to define as superior or inferior. Both companies see themselves are part of a larger digital experience eco-system; the question is whether or not continuing with these two products as separate brands makes sense.
However, just because two similar companies are owned by the same parent company, it doesn’t mean that a merger is inevitable. It is also quite plausible that Accel-KKR sees a bright future in digital experience management and is banking on enough industry growth to support both platforms. If a rising tide lifts all ships, having two ships in the water is not a bad move.
In short, it’s too soon to say whether or not a merger is in the works. I do believe a merger could be a very good thing for the long term product roadmap, from both a business and a client standpoint. Or, if the plan is to develop each product along separate paths that do not intersect as much as they do today, each company is now well funded to pursue this strategy. Regardless, none of the parties involved are saying anything definitive at this point. “Stay tuned” is the best advice for now.
** UPDATE 1/27/15 **
EPiServer and Ektron did, in fact, announce their merger on January 27th. The new company, operating under the EPiServer name, will continue to offer both CMS brands. Read more about this merger and what it means for you here.
Who is Accel-KKR?
Accel-KKR is an American private equity firm with over $2.5 billion in assets under management. Their portfolio is heavily tech-focused, with both SaaS-based and licensed software offerings, models utilized by both EPiServer and Ektron. Most of their past investments involve multi-year funding and expansion, culminating in a sale or merger with another company. Accel-KKR made a significant investment in Ektron earlier this year, with the full purchase seen as the final validation of Ektron’s business model and future potential. EPiServer had been owned by another private equity group, but the purchase by Accel-KKR moves ownership to the United States from Europe.
What happens next?
For now, it appears to be business as usual in the short term. I’m sure there is plenty of activity occurring with the ownership transfer, but this will likely not be felt from an end-user standpoint. I would anticipate some personnel changes, new sales and marketing initiatives, and the beginning of a shift in planning the long term strategic roadmap. But otherwise, there should be nothing to concern the current day to day functionality of the thousands of websites running under each platform. “Growth" is the operative word coming from both Ektron and EPiServer. As a partner, WSOL is well positioned to support both platforms today and wherever they go in the future. We plan to continue our strong partnerships with both companies, but, more importantly, we will stay committed to our partnerships with our clients, guiding them through whatever changes occur.
Below are links to the official press releases from Ektron and EPiServer regarding the investments: