After turning down a $17 billion takeover offer earlier this month, Zendesk cited a number of factors, among them a perceived undervaluation of the firm, particularly in light of the company’s then-pending $4.13 billion acquisition bid for Momentive/Survey Monkey.
However, when investors rejected the transaction on Friday, it has raised worries about the company’s future direction.
On February 10, Zendesk rebuffed a significant offer from a consortium of private equity companies, in part because the company expected to generate $5 billion in sales by 2025, according to its projections. With the Momentive transaction no longer on the table, the business now expects to generate $3.4 billion in sales in the same year, representing a huge $1.6 billion increase above previous projections.
The question is whether Momentive’s potential revenue was sufficient to justify the price tag that Zendesk was willing to pay, its entry into the customer experience market, and the fact that it would have diverted the acquirer’s attention away from its core customer service orientation. Was Zendesk’s willingness to pay a high enough price to justify Momentive’s entry into the market?
It seems doubtful that SurveyMonkey will become a significant participant in the customer experience sector, according to Brent Leary, the founder and lead analyst of CRM Essentials, Inc. I didn’t really view this as an acquisition that would have any real major influence on the competitive landscape of the sector from a customer experience standpoint,” he added.
However, as Zendesk CEO and founder Mikkel Svane said in a blog post announcing the termination of the Momentive acquisition, customer experience is still a sensible sector for the firm to expand into.
‘We think that genuine knowledge can only be gained by analyzing billions of consumer interactions and turning them into actionable insights for our clients.’ In his letter, he said that “we are as devoted as ever to providing value for clients by enabling them with deep, multi-dimensional consumer intelligence capabilities and insights.”
Leary does not disagree, but he believes that survey technologies will become a lesser part of the overall picture as more automated signal collection becomes commonplace. The acceleration of signals automatically created by digital interactions resulting from human exchanges as well as from the use of devices will continue to grow exponentially, according to him. “While surveys are an important tool to leverage in understanding the current mindset of customers,” he said.