Inuvo Inc. isn’t being sold after all.
ConversionPoint Technologies Inc. of Newport Beach, California, announced last fall that it would pay $75 million for the Little Rock marketing company. But the deal unraveled in June.
Inuvo Chairman and CEO Richard Howe told Arkansas Business last week that the government shutdown in December and January threw off the timing of the transaction.
“The thought was that we could combine the private e-commerce technology company [ConversionPoint] with a public marketing technology company [Inuvo] and then … take it freshly public again, in a new way, with new positioning around e-commerce and marketing tech in one,” he said. “And there is a lot of market analysts who have been suggesting that is the way the market is going to be evolving … . There was no reason why that wasn’t a good idea, by the way.”
So the companies signed an agreement in November, and their plan was to take the combined entity public in late February or early March, after regulatory approvals were obtained.
As part of the transaction, $36 million had to be raised, and investment bank Oppenheimer & Co. had said it could do that, according to Howe.
“We had all the pieces in place, right, to get it done. We had a good investment bank that said they could get the money raised to get this done. Why didn’t it happen? The short answer is the government shutdown,” Howe said.
Taking the combined entity public would have been delayed by four to six weeks, to April or May. “Ultimately, the delay caused the market to move in a different direction, and the opportunity to get the deal done and raise the $36 million, the window closed,” Howe said.
“If we’d gone public in the time frame that we wanted to, we would have preceded some of the other IPOs that took off, like Uber and Lyft,” he said. “So the timing — there were people ready to make investments, wanting to go into public companies, and we would’ve nailed it perfectly.”
But with the delay, he said, “now you’re behind everybody else.”
A $2.8 million breakup fee payable to Inuvo was included in the companies’ termination agreement. Howe said ConversionPoint didn’t have that much cash, so instead:
- PT Investments LLC, an affiliate of ConversionPoint, has forgiven a $1 million loan it made to Inuvo;
- ConversionPoint will transfer its ReTargeter business to Inuvo by Dec. 31; and
- ConversionPoint will reimburse by Sept. 15 Inuvo’s half of the approximately $250,000 the companies spent to settle a lawsuit challenging the sale.
Howe said the ReTargeter business does exactly what the name implies. It’s a marketing technology that allows a company to market to customers after they leave the company’s website, encouraging them to come back and complete a purchase.
Inuvo does the same thing — and does it better, Howe says — with its IntentKey, “an anonymous consumer information data platform.” After the settlement, Inuvo hopes to sell IntentKey to ReTargeter’s clients, Howe said.
Howe said IntentKey is “probably the first major new anonymous consumer information data platform built in the last two decades. It provides a means to allow our clients to build online audiences that they can target for whatever product or service they’re selling.
“Data has always been the cornerstone of marketing. It’s the same concept; only think of this like a data platform built for the 21st century — anonymous and privacy compliant and all the things you need if you’re going to be in the data business.”
He also said Inuvo’s focus now is on growing IntentKey and that it is not actively pursuing another merger. Its stock was trading at about 30 cents per share last week, down from a 52-week high of $1.75 in April, before the deal tanked. Its market capitalization was about $14 million.
“If somebody wants to come in and buy the company at a premium, then we would be open to that,” Howe said. “But, for now, our heads are down and we’re going about our business.”
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