IgnitionOne is shutting down. Read the letter its CEO sent to shareholders about what happened to one of adtech's oldest companies.

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IgnitionOne is shutting down. Read the letter its CEO sent to shareholders about what happened to one of adtech's oldest companies.

IgnitionOne CEO Will Margiloff

IgnitionOne/Facebook

IgnitionOne CEO Will Margiloff.

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  • One of the oldest names in adtech, IgnitionOne, will shut down after selling off its assets in two transactions that were finalized on November 19, the CEO wrote in a note to shareholders.
  • The 15-year-old company, which raised $85.2 million since 2013, has recently shed its headcount, and a former investment firm and two other adtech companies say it owes them money.
  • IgnitionOne CEO Will Margiloff warned investors in the letter that they would likely not receive any money from the company. IgnitionOne has passed its remaining assets on to an independent trustee.
  • Margiloff cited broader challenges in media and digital advertising in part for the company's struggles. "The grounds have shifted in the digital market and we couldn't get to safer ground in time," he wrote.
  • Click here for more BI Prime stories.

One of the oldest names in adtech is shutting down. After cutting its headcount and facing allegations about unpaid bills, adtech firm IgnitionOne plans to close, according to a note shareholders received this week from CEO Will Margiloff that was viewed by Business Insider.

On November 20, Margiloff emailed IgnitionOne's shareholders that the company's assets were sold in two separate transactions for a mixture of cash and stock that finalized on November 19. IgnitionOne has given an independent trustee its remaining assets and plans to "ultimately dissolve the entity," read the note.

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Margiloff warned investors in the note that they would likely not receive any money from IgnitionOne.

"We worked to the end to find a way to achieve a positive return for all of our equity investors," he wrote.

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Margiloff wrote that IgnitionOne spent most of this year looking for a buyer. He said that while the company had its best year in terms of percentage growth, revenue and EBITDA, it was unable to renew a line of credit from existing lenders.

Separately, an audit of IgnitionOne last year by BDO LLC said the company was in the process of negotiating a trade receivables-backed line of credit.

The news brings to an end one of the oldest adtech companies that was once billed as a "one-stop shop" to help marketers with their digital ad spending. Fifteen-year-old IgnitionOne was among a handful of adtech firms that pitched advertisers on its expertise with Google, Facebook, and programmatic advertising early on. It raised $85.2 million since 2013, according to Crunchbase.

In 2010, ad holding company Dentsu acquired IgnitionOne through its acquisition of Innovation Interactive to beef up its US presence. IgnitionOne was later spun out of Dentsu Aegis.

In his note, Margiloff cited broader changes in media and advertising that led to the company's struggles to get profitable.

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"There are lots of reasons why, but foremost is the fact that the grounds have shifted in the digital market and we couldn't get to safer ground in time," he wrote.

In a short email to Business Insider November 22, Margiloff acknowledged the shareholder letter but didn't elaborate.

"As you read, in this difficult situation, our efforts were and continue to be focused on creditors, clients, employees and partners," he emailed.

Back in January, IgnitionOne hired investment firm Progress Partners to help it find a buyer. In October, Progress Partners filed a civil complaint in Massachusetts District Court alleging that IgnitionOne owes more than $590,000 in damages plus attorney's fees, interest and other costs.

In addition, Business Insider previously reported that IgnitionOne owes at least two adtech companies money.

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IgnitionOne's assets are being split between Zeta Global and Publicis Media

The two transactions Margiloff mentioned in the note relate to Zeta Global and Publicis Media, according to sources with direct knowledge.

Zeta Global will take over IgnitionOne's software business, including 65 US employees, a Zeta Global spokesperson said. The deal expands on a previous agreement that IgnitionOne has with Zeta Global. In September, Zeta Global inked a deal to push the ad spend that IgnitionOne manages through Zeta Global's demand-side platform. As part of the September deal, Zeta Global acquired about 15 IgnitionOne employees.

Additionally, about 10 IgnitionOne employees are joining Publicis Media, which has been a key agency client, to work on the agency's programmatic business, according to a source close to the deal.

Read the full letter sent to IgnitionOne shareholders on November 20 below.


Dear Investor,

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We have some very important news to share that impacts the future of IgnitionOne. IgnitionOne assets have been sold in two separate transactions for a mixture of cash and private stock. I am confident that this is the best strategic action for our clients, employees, partners and stakeholders to which our Board of Directors owes duties. Attached please find a notice required by Delaware law.

When we all put our cash and efforts behind this company, expectations were high. Today, we met a bunch of them but not the one that mattered the most. A return on investment. There are lots of reasons why, but foremost is the fact that the grounds have shifted in the digital market and we couldn't get to safer ground in time.

While the business had turned the corner this year and had the best year to date for % growth, revenue and EBITDA, our liquidity was severely hampered by our inability to renew our line of credit from existing lenders. The underlying cause of this was client concentration and that we operate in an industry where we are required to pay for inventory from suppliers long before our customers remit payment to the Company.

We have worked very hard for the past few years to reduce our costs and raise needed capital, including selling non-core parts of our business, paying down critical vendors, finding operational efficiencies and, reducing the size of our team. We have done this with full disclosure and consent of our Board of Directors and lenders with the intent to bring more profitability to the business.

Entering 2019, we could see where the market was heading and spent the majority of the year trying to find a partner to help refinance the business, merge or a buy the Company. We had several viable transactions in process for pieces of the business which would have helped the business continue. Unfortunately, we could not bring any of the buyers across the finish line. This led us to where we are today, which requires us to satisfy our obligations to our secured lenders first and then others based on an order of legal and contractual priority.

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To maintain the remaining value of our assets, we assigned our assets to an independent trustee. Following this assignment, the assets of the Company were sold in the aforementioned two simultaneous transactions that were executed on 11.19.19.

It is frustrating knowing that this great opportunity never translated to the value we all expected. I can assure you that my team and I (all of whom are sizable cash investors in the business) did all we could to find a positive outcome. We worked to the end to find a way to achieve a positive return for all of our equity investors. Unfortunately, at this point, I would say that there is a low probability that our equity shareholders (including employee shareholders) will receive any proceeds.

At some point in the future, once all remaining obligations are addressed by the Trustee, we will ultimately dissolve the entity and you will receive final paperwork. Like you, I am deeply disappointed and sorry for having to deliver this news.

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