There weren’t signs anything was amiss at MediaMath’s rooftop space overlooking the Croisette promenade at the Cannes Lions festival in France this past June.
The adtech company held panel sessions and meetings at the “MediaMath Penthouse.” Guests were treated to branded MediaMath sunhats and toiletry bags filled with Cannes survival items like sunscreen, mints, and energy bars. It was just like any other year at the advertising industry’s annual boondoggle.
MediaMath had sent more than a dozen staffers, a largely brand-new leadership team brought on board to turn around the company’s recent financial woes. MediaMath defaulted on its credit facility with Goldman Sachs during the coronavirus pandemic and, unable to find a buyer, gave up a controlling stake in the business to its private-equity investor Searchlight Capital. The refinancing wiped out the equity of early investors but handed MediaMath a lifeline.
“I sort of felt like there was an air of optimism — that they were doing a good job and excited to be out in Cannes,” said a person who met with MediaMath execs during the event.
But behind the scenes, MediaMath CEO Neil Nguyen had barely been sleeping, according to three people familiar with the matter.
In April, he had been told by the company’s private-equity owners he had until the end of June to sell MediaMath or find fresh investment as the company was on the brink of insolvency. As many of his fellow Cannes delegates settled into bed after long sun-soaked days of hobnobbing, Nguyen was hopping on 3 a.m. calls with MediaMath’s board, attempting to get a rescue deal over the line.
Just two weeks after Cannes, the freshly printed corporate swag would become an adtech relic. MediaMath filed for Chapter 11 bankruptcy protection in a Delaware court on June 30, a Friday, and announced its plan to cease operations that day.
Per the filings, the company owes about $125 million in trade liabilities to hundreds of companies including Google, Microsoft’s Xandr, and the publicly listed adtech companies Magnite and PubMatic. Insider is also listed as a creditor in the bankruptcy filings.
It has about $165 million in outstanding loans. About 300 MediaMath employees have lost their jobs as the company winds down the business.
It marks a sad ending to one of the adtech industry’s early pioneers and best-known names. MediaMath — creator of the first demand-side platform, a company that had once reached a billion-dollar valuation, grown to 750 employees at its peak, and courted acquisition talks from the likes of Singtel, IBM, and Bain Capital — couldn’t even be sold in a fire sale.
It had been inches away from avoiding such a fate but was dealt the final blow when a would-be buyer unexpectedly pulled out of a deal in the final throes. Now MediaMath’s collapse could have ripple effects on the industry as agencies and advertisers scramble to reroute their ad campaigns and adtech’s reliance on lines of credit is once again laid bare.
This account of MediaMath’s final days draws from court filings and interviews with 15 former employees, adtech insiders, and other people close to the company. Most of the people interviewed requested anonymity because they weren’t authorized to talk about the company or disclose confidential discussions. Their identities are known to Insider.
“MediaMath was and is a rare bright spot of not just smart, talented people, but principled and good human beings,” said MediaMath’s founder and former CEO Joe Zawadzki in his first interview about the company since its board pushed him out in December 2021.
“I’m very sad that it just didn’t get to where it could have gone and shocked that it went down this way at the end.”
MediaMath was told it had to sell, or else
To borrow from Ernest Hemingway, MediaMath’s collapse happened in two ways: gradually, then suddenly.
In April, just as he landed back in the US from a business trip to Japan, Nguyen received a bombshell phone call that made his stomach sink to the tarmac.
MediaMath had about three months’ worth of cash left, and Searchlight wasn’t willing to put in more money — he needed to find a new home for the company.
“Neil got caught off guard,” a person familiar with the matter said. “Everyone was surprised. It’s very unusual to pull the plug within a year of investment.”
A former MediaMath client when he worked at the media agency Havas, Nguyen had joined the MediaMath board as an advisor in 2021 and last year became its CEO to help drive the restructuring of the business.
“Ultimately, we believed we had a 24-month runway to turn the company around,” Nguyen said in an emailed statement. “Unfortunately, that wasn’t the case. We needed an additional capital infusion in early 2023.”
Former MediaMath staffers said things were looking hopeful at the beginning of the year.
Nguyen had refreshed the leadership team with a new CFO, a new chief technology officer, and new top sales executives. The company had a renewed focus on courting advertising agencies — it had previously been considered a misstep that MediaMath had instead looked to work with marketers in-house. Former clients were returning and the performance of the platform itself had become more stable, staffers said. It had even become “EBITDA-positive” in 2022, having cut costs, according to people familiar with the matter.
“It felt like we were executing,” a former MediaMath executive said. “We were reshaping into a scrappy culture and didn’t spend $1,000 on lunches or stay in expensive hotels.”
But amid the slowdown in growth in digital advertising, and a credit market spooked by the Silicon Valley Bank collapse, it wasn’t enough. MediaMath had continued to burn through cash and again defaulted on its crucial credit agreement with Goldman Sachs.
Nguyen and the senior team needed to get a deal over the line.
The deal that evaporated
MediaMath and its newly appointed investment bank Houlihan Lokey set to work. According to court filings, 26 would-be buyers or investors engaged in initial discussions, and 14 did diligence on the company under nondisclosure agreements.
The publicly traded adtech firms Viant and Zeta Global put forward offers that would have still included a bankruptcy process, people familiar with the matter said. MediaMath feared the bankruptcy process could spook customers and disrupt the company in the short term. Viant didn’t respond to requests for comment. Zeta declined to comment.
Instead, MediaMath looked to the Swedish investment holding company Media and Games Invest, which initially was willing to avoid bankruptcy court.
A relative newcomer to the adtech space, MGI has had the strategy of acquiring distressed companies that nonetheless have sustainable revenue streams and integrating those into its wider portfolio, which includes assets like the programmatic ad platform Verve Group and the free gaming platform Gamigo Group.
MGI put forward an initial offer to acquire MediaMath from Searchlight for up to $70 million, based on a $50 million fixed payment in cash and up to $20 million in an earn-out, depending on whether the company could hit certain performance targets through to 2024, according to court filings.
Several rounds of negotiations followed, with MGI reducing the offer price, according to people familiar with the matter. Time was ticking. By now Cannes Lions was around the corner and senior leadership was debating whether to attend. But MediaMath was confident the deal would go through.
“You have a business that has its biggest clients in Cannes and on the other side you’re balancing trying to get a transaction or a deal done,” a person familiar with the matter said. “You have to do both: You have to show up because when a deal goes through you still have a revenue target on the other side of the transaction.”
MGI CEO Remco Westermann was also in attendance at Cannes and privately met with Nguyen multiple times as they hammered through revised terms, according to people familiar with the matter.
At last, everything was set for MGI’s Verve Group to acquire MediaMath in a deal that would close July 3. Signatures were in escrow and a press release had been drafted. It looked as if MediaMath had once again been saved from the brink.
But as MGI did its final checks into MediaMath’s finances, its board kept uncovering new details about the company’s liabilities, including the scope of its credit agreements, and began to scrutinize overdue payments on sales tax and to vendors, according to people familiar with the matter.
MediaMath’s sprawling office in 4 World Trade Center was also a big concern, according to people familiar with the matter. Replete with a collection of artwork and panoramic views of downtown Manhattan, the two-floor space had represented MediaMath at the peak of its power when the company took up residence in the building in 2015.
MediaMath now owes its landlord more than $2.5 million in rent and is seeking to free itself from its multiyear lease as part of the Chapter 11 proceedings.
On June 24, MGI’s board voted against the MediaMath purchase.
It was a deep shock for some at MediaMath. “It felt like we were breathing life back into this brand and the carpet got taken out from under us,” a former executive said.
Negotiations for what had seemed to MediaMath like a done deal had now run so long that it didn’t have enough cash on hand to meet July’s payroll and pay vendors. In the final days of June, the management team and Goldman Sachs tried to line up another transaction or enter a softer bankruptcy process, but they ultimately ran out of time.
On June 30, MediaMath announced it would shut down.
Former employees described “shock” at receiving the email telling them the company was closing.
“I don’t think I’ve ever cried at work before this,” a former MediaMath staffer said.
A separate laid-off staffer expressed some relief that MediaMath had said it would pay them their outstanding salaries, vacation allowance, and expenses. But former employees now face a tough job market in a tech industry beset with layoffs.
It marks the end of an era in adtech. “I am gutted about the impacts for our employees, our clients, and all of our ecosystem partners,” Nguyen said in the emailed statement. “This has been the most difficult situation I’ve navigated in my 23-year career as a leader.”
“We collectively believed as a company, board, and advisors that we had a deal in hand,” the statement continued. “We needed to quickly pivot to the alternative reality in which we are now operating.”
A representative for Searchlight said the firm was disappointed the sale didn’t materialize.
“It is very sad that MediaMath is not sold as an ongoing business but is being shut down,” Westermann said.
Westermann added that having acquired more than 15 adtech businesses so far, “we know that sometimes there are obstacles which are too high to close a transaction successfully,” but he declined to offer specifics about the MediaMath negotiations.
MediaMath’s ripple effect on the rest of the adtech space
News of MediaMath’s demise just before the July 4 weekend made for a dismal holiday for its clients and partners.
MediaMath switched off access to its platform to customers on June 30. Some ad-operations executives at agencies and adtech companies described a frantic weekend exporting their planned marketing campaignsto MediaMath rivals like Comcast’s Beeswax and The Trade Desk.
Many of those owed money from MediaMath doubt they’ll manage to recoup the funds. As its largest secured lender, Goldman Sachs will be paid before other creditors.
“It kills us that there’s going to be financial repercussions,” on the wider adtech ecosystem, one former MediaMath executive said.
Some experts think MediaMath’s closing, the latest in a line of adtech bankruptcies, is emblematic of a bigger problem within the industry.
When advertisers or agencies buy ads through a platform like MediaMath, the adtech company must pay publishers immediately for their ad space. But the adtech company must wait — often 90 days or more — to be paid by the advertiser or agency. It’s why many companies like MediaMath are so dependent on lines of credit. That’s fine during the boom times — but trickier to navigate when interest rates are up, when lenders are writing in more covenants to agreements, and when payment terms from ad buyers stretch longer.
There could still be life in MediaMath yet. Some industry insiders are still hopeful some of MediaMath’s assets could be picked up. Among them is its former CEO and cofounder who led the company as it passed on a string of multimillion-dollar acquisition deals in the mid-2010s.
Zawadzki, who now invests in adtech companies through his venture-capital firm AperiamVentures, said he’d be willing to submit a bid should MediaMath’s assets go to auction as part of the bankruptcy process.
“I’d love to see this thing become an industry utility,” Zawadzki said. “I would love to see a ‘Project Phoenix’ here.”
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