The house Joe Zawadzki built will be foreclosed.
AdExchanger has learned that the demand-side platform, which raised $600 million since 2007 and had a peak valuation of more than $1 billion, will file for bankruptcy.
Emails went out to MediaMath staffers and partners on Friday morning to say the company will shut down operations in the coming months. Access to MediaMath’s platform will no longer be available as of June 30.
Viant and MGI-owned Verve Group were recently each in a process to acquire MediaMath, but potential deals foundered in both cases. MGI was in discussions as recently as this week.
Despite its storied history – MediaMath is known for having launched one of the the first-ever DSPs – the company has been plagued by financial issues.
The majority of MediaMath’s more than 300 employees will lose their jobs, with just a small number of people remaining to take care of basic functions during the bankruptcy proceedings.
If the bankruptcy is a Chapter 7, a company’s assets are liquidated. Whereas Chapter 11 allows for a reorganization by which a debtor can still operate its business, the main purpose of a Chapter 7 is to sell a company’s assets to pay its obligations.
[Update on 7/1 at 9:41 a.m.: MediaMath filed for Chapter 11 bankruptcy protection and not Chapter 7. A Chapter 11 bankruptcy at least offers the business a chance to recover and restructure while also paying back creditors.
After paying remaining wages and salaries, the main outstanding secured lenders will be paid back – in this case, Goldman Sachs – followed by unsecured creditors, such as vendors and suppliers, although how much remains to be seen.
Rough numbers
Although early MediaMath shareholders expected a big exit – whether that be in the form of going public or the company getting bought for big bucks – the company never quite closed the deal.
MediaMath raised more than $600 million since it was founded in 2007 and boasted a roster of 3,500 brand and agency customers, but was forced to recapitalize last year with Searchlight Capital.
The startup sold a controlling stake to Searchlight in exchange for an agreement to invest up to $150 million through a combination of fresh capital and debt refinancing.
As a result of the Searchlight transaction, MediaMath’s shareholders, early investors and co-founders, including Zawadzki, lost all of their equity in the company, a tale already deftly told by Lara O’Reilly at Insider.
MediaMath had also taken a $150 million credit facility from Goldman Sachs in 2017, which it was still in the process of paying back.
These financial machinations – which have been going for at least six years – were largely a result of MediaMath missing its M&A window and not finding a viable acquirer.
LUMA was reportedly shopping MediaMath in 2021, and MediaMath hired investment bank Houlihan Lokey in April to explore strategic options. Over the years, IBM, Magnite, Amazon, Tremor and IPONWEB were all rumored to be potential acquirers.
Nothing came of it.
Beginning of the end
Despite its woes, or perhaps more so as a result of them, former Sizmek and DG executive Neil Nguyen was brought in early last year to replace Zawadzki as CEO of MediaMath.
A press release announcing the transition pointed to Nguyen’s past experience “on the front lines managing companies through strategic and technology transformation and strategic transactions.”
The Searchlight recapitalization took place a few months later, and Nguyen’s remit was to drive financial growth and help MediaMath find its exit strategy.
But it appears that Searchlight’s timer ran out, and the firm was no longer willing to finance MediaMath, which was insolvent.
Searchlight began a sales process for MediaMath and, because MediaMath still owes some money to Goldman Sachs, the bank had a lien on the company and was directly involved in negotiations.
When it’s over
It’s possible, but not guaranteed, that someone (or multiple someones) will buy pieces of MediaMath at auction.
In the meantime, MediaMath’s closure creates a vacuum that other DSPs, including The Trade Desk, Viant and Google, will quickly rush to fill.
Macy’s, for example, used MediaMath as its primary DSP, but the retailer also has a relationship with the Trade Desk. That’s a tempting blue-chip account.
The MediaMath account vultures are part of the circle of life.
But as one ad tech executive put it to AdExchanger on condition of anonymity, “other DSPs will benefit, but what happened to MediaMath isn’t good for ad tech and it’s a sad way for the company to end.”
T.S. Eliot had it right: “This is the way the world ends, not with a bang but with a whimper.”
The following is the email that was sent to partners –
I am reaching out today to share an important update on our business.
As you may have already heard in the news, MediaMath has been exploring strategic alternative options for the past several months. This included securing additional financing and/or merger or sale of the company. Unfortunately, due to the changing and uncertain economic environment, and the rapid increase in interest rates, we were unable to secure this planned capital infusion. This led to negotiations with several prospective buyers as we pursued a sale transaction.
Despite our best efforts, the deal we expected to be consummated this week fell through yesterday. We are left with the inability to continue operating the Company in a normal course of business. Accordingly, we are required to wind down our business immediately.
Today will be most employees last day.
As of June 30, access to the platform will no longer be available. We are working diligently to minimize business impacts and regret any inconveniences caused by this announcement. We intend to work with you to address your concerns and any outstanding obligations as needed.
We value our relationship with you and had hoped to work with you for many years to come. As a team, we are deeply disappointed we cannot continue to partner with you and your business.
There will be a small group helping wind down the company, please reach out to [email protected] with any questions.
Story updated on 6/30 at 6:25 p.m. EST to include the email to partners.
