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Brendan King, CEO of Vendasta Technologies Inc, on the top floor of the company’s new office space in Saskatoon on June 10, 2021.Liam Richards/The Globe and Mail

Vendasta Technologies Inc. has made its second acquisition since ditching plans to go public last May in favour of a $120-million private financing.

The Saskatoon company, which sells digital tools to companies that serve small businesses, said Tuesday it had acquired MatchCraft LLC from New York media giant Advance Local Media LLC.

MatchCraft, based in the Los Angeles area, specializes in providing search, display and social-media advertising placement for companies through its AdVantage platform across digital channels such as Google, Facebook and Bing, handling hundreds of millions of dollars worth of ad spending a year.

The parties did not disclose financial terms, though Vendasta chief executive officer Brendan King said in an interview the deal was “material” for his company. Two industry sources said MatchCraft, which has more than 70 employees, likely sold for upward of US$50-million. The Globe and Mail is not disclosing the identities of the sources as they are not authorized to discuss the matter publicly.

Last month, Vendasta also acquired CalendarHero, a small Toronto-based provider of artificial intelligence-powered scheduling software.

Vendasta was one of a slew of Canadian companies that filed to go public last year after emerging as one of Canada’s largest and most heavily funded private technology companies between Calgary and Toronto. The company generated $42.6-million in revenue in 2020 by offering tools that help small businesses speed up digitization efforts in areas such as e-commerce, remote collaboration and online learning. Revenue increased by about 40 per cent in 2021, Mr. King said.

But after setting out last March to raise US$100-million through an initial public offering on the Toronto Stock Exchange, Vendasta struggled to fill out its order book from institutional investors amid a market swoon that cut valuations of tech stocks. Several other companies that went public in that time slashed their deal sizes and offering prices to complete their IPOs. Instead, Vendasta pulled its IPO and raised $119.5-million in growth capital led by New York’s Lugard Road Capital, an affiliate of hedge fund Luxor Group.

Mr. King said given another recent sell-off in technology stocks, “looking back at the markets now it seems like [pulling the IPO was] the best decision ever in my life.” He said the company is “open to more acquisitions.”

Vendasta, which aims to be the “operating system of choice for local businesses,” provides marketing automation, customer relationship management and billing software to more than 60,000 resellers that, in turn, market the tools to millions of small businesses.

Mr. King said one of Vendasta’s weaknesses had been the lack of its own advertising technology platform to offer to its clients as a complement to its marketing technology products, “and it’s hard to build adtech.” He added that by buying 23-year-old MatchCraft, a long-standing strategic partner, instead of building its own adtech platform, Vendasta “really accelerated our timeline by at least five years.”

Online ad spending rebounded last year after a rough 2020. In 2021, the U.S. digital advertising market expanded by about 35 per cent to US$162.4-billion and it is expected to grow by another 17 per cent this year, according to global advertising agency Magna Global. Online ad spending is expected to get a boost this year from the Winter Olympics in Beijing, the men’s World Cup of soccer and the U.S. midterm elections, Forbes reported last month.

Charles Laughlin, a Chicago-based senior analyst with Localogy Insider, an online publication following the U.S. local digital search and marketing technology space, said in a post Tuesday that despite the undisclosed value of the MatchCraft deal, “it’s a big deal in the local search space at any price. It represents the combination of two of the most recognized brands focused on delivering digital marketing tech for small businesses.”

MatchCraft, Mr. Laughlin added, “fills a big gap in Vendasta’s capabilities [and] will help the company grow its addressable market.”

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