Here’s another hundred-million-dollar PE deal in the comms space [PR tech sum no. 50]

Investor relations platform Q4 enters reported $257 million acquisition deal with Sumeru Equity Partners; PR tech startup Handraise hauls in $6.3 million seed round

Twice in my career, I’ve worked for companies that acquired several software companies with the intent of merging them into one business or product.

Both companies had plans that looked good to go on paper. One executed well on smaller earlier deals but failed to apply the lessons learned on larger deals later. In my opinion, the last deal the company closed tanked the company.

The other company didn’t fare much better. They bought a bunch of different products and wound up with one that pretty much carried everyone’s weight. Since then, a few of those that were in the original “bunch” have been divested.

It took years of blood, sweat and corporate treasure to bring these plans to fruition…and they clearly didn’t come close to hitting ROI objectives. While this was purchased with corporate funding, not private equity (PE), the strategy was similar:

Find synergies;Trim a bit here, trim a bit there; andSell the whole for more than the sum of its parts.

We see many deals get to the first two bullet points quickly – but the last one? You don’t see that too often.

Why? The first two bullets are off. In other words, there has to be really good fit. That means aligned under a strategic purpose – a shared vision – and cultures that are compatible. Those things together are really hard to find.

So, you should know that I’m not opposed to dealmaking. But if I come off as a little skeptical of all the PE money sloshing around in PR software, this gives you a sense of where I’m coming from.

And now onward with this month’s PR tech sum.

1. Q4 to be acquired by Sumeru Equity Partners

Investor relations platform Q4 Inc. (TSX:QFOR) announced entering a definitive agreement to be acquired by the private equity firm Sumera Equity Partners for $257 million, according to reporting from Betakit, a news outlet that covers the Canadian tech scene. Shareholders will receive $6.05 per common share, which represents a 36% premium on a recent closing price.

“With the buyout, Q4 Inc. is set to join a wave of other Canadian tech companies that went public during the pandemic, have seen their stock prices fall and fail to recover amid the tech downturn, and elected to go private once more,” wrote Betakit.

Sumera Equity Partners had danced around the PR tech space for a while. It last bought SocialChorus, perhaps one of the best-known internal comms platforms for $100 million in 2020. The PE firm later merged it with Dynamic Signal and rebranded as FirstUp, which reached $100 million in ARR this year.

This latest deal adds to the grip private equity has on communications tools. PE firms own the largest tech companies in the PR space. Earlier this year, Meltwater was taken private by a joint PE organization. Cision has been passed around by two PE firms.

Last year, Symphony Technology Group acquired four PR tech companies including Onclusive, PRgloo, and, later, Critical Mention. It wound up folding them all under the Onclusive brand.

Before that, Apollo Global Management, a publicly traded private equity firm (NYSE: APO) acquired the assets that formed Notified. Notified has changed its name multiple times, but was created out of the remnants of the former press release service Market Wire and investor tools out of NASDAQ, such as Globe Newswire.

Q4 just announced some product enhancements and its most recent earnings too. Revenue was up 3.5% in the 3rd quarter to $14.7 million. It lost $3.7 million for the quarter or about .09 cents per share.

This latest M&A deal is expected to close in Q1 of 2024.

2. Startup Handraise raises $6.3 million seed round

A new PR tech startup called Handraise announced it earned $6.3 million in seed funding. The company says it’s developing a product that uses “large language models” [plural] for PR measurement. LLMs are at the heart of generative AI technology.

It’s fairly large for seed funding, although the company’s founder and CEO, Matt Allison, has a track record of success in bringing PR tech to market. He previously founded TrendKite, a buzzy media monitoring tool that was acquired by Cision in 2019 for $225 million.

To the best of my knowledge, this is the only venture funding awarded to a PR technology company in 2023.  The year prior, in 2022, TrueScope, an Australian-based media monitoring company raised $6.2 million; Propel, an Israeli tech startup founded, landed $4.5 million; and Muck Rack drew $180 million.

3. MyNewsDesk adds generative AI

Swedish PR platform MyNewsDesk has added generative AI to its platform. In an email, the company said its AI is “designed to assist communicators throughout their journey of crafting, distributing, and tracking news about their organizations.”

The AI is based on OpenAI’s technology “with our unique datasets” according to the company. “The service is designed to never compromise on privacy and information security. This ensures that customer data stays in the customer’s control and is never used for model training.”

Most of the PR software tools I’ve looked at are white-labeled versions of OpenAI. The one exception I’m aware of is Agility PR Solutions which has developed its own generative AI solution in-house. [Note: being white label isn’t a bad thing. Many vendors white label TVeyes for broadcast monitoring, and have done so for years, because it’s become the industry standard.]

MyNewsDesk calls its generative AI “CoPilot” which suggests it’s being pitched to augment PR capabilities, rather than replace them, which is one of two angles I see from some vendors (the other angle promises to replace PR pros). Microsoft calls their generative AI “Copilot” too – and Agility PR Solutions uses a similar phrase.

The company joins the ranks of other PR software vendors that have added generative AI, including Propel, Prophet, Notified, Muck Rack, Agility and Burrelles, which is white labeling the technology from Agility.

4. PR tech briefs and mentions

Muck Rack teams up with Keyhole. Muck Rack partnered with Keyhole, which enables Muck Rack customers to add social media monitoring capabilities by Keyhole to their Muck Rack subscription. Keyhole monitors for mentions, hashtags, influencers and keywords across Twitter, Facebook, Instagram, YouTube, TikTok, Reddit, blogs and forums.More gen AI. Owler announced a generative AI tool to help sales professionals draft emails, LinkedIn messages, and voicemails. Owler was acquired by Meltwater in 2021 for ~$25 million.Le président. The Federation Internationale des Bureaux d’Extraits de Presse (FIBEP), a global media intelligence membership association, named Todd Murphy of Truescope, as president of its new Board of Directors.

5. Content picks

Stats for next year. PR stats for 2024 curated by Meltwater.2024 budget. Marketing (42%) and marcom (49%) leaders are more optimistic about the potential increase in their 2024 budgets, finds a survey by Muck Rack.Cloud partners. Stagwell enlists Google Marketing Cloud to accelerate generative AI bets, reports Marketing Dive. Stagwell owns the PR startup Prophet, which is highly dependent on AI.

Have an announcement from a PR tech vendor?

Here’s the updated list of PR technology companies I’m watching and here’s a clear description of the stuff I want to cover.

Need an extra pair of B2B marketing and PR hands?

Hire a B2B marketing and PR consultant who can think strategically and execute effectively. Contact me at frank-at-swordandthescript-dot-com for an introductory call. Here are some useful links: about | services.

If you enjoyed this post, you might also like:
A Fairly Comprehensive List of PR and Comms Technology Vendors for 2023 [PR Tech Sum No. 40]

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