Like all relationships, if poorly managed, mergers and acquisitions (M&A) can quickly spiral out of control. Without proven processes and experienced leadership in place, newly merged companies can suffer from misalignment, culture clashes, reduced morale and damaged brand equity, all of which can destroy shareholder value and the businesses themselves. But if done well, mergers can help companies scale and grow quickly, bringing a ton of value for shareholders, employees, and customers alike.
A textbook example of M&A gone wrong is when Yahoo acquired Tumblr in May of 2013 for a cool $1.1 billion. Yahoo’s CEO at the time, Marissa Mayer, vowed that the acquisition would grow the company’s audience by 50% and make it a contender with heavyweight companies like Google and Facebook. But as 2015 rolled around, Tumblr was still bleeding red. After promises went undelivered and infighting and a mass exodus ensued, Yahoo eventually wrote off its losses to the tune of $712 million from the failed acquisition.
Dating Groups Acquires Cupid Media
But when it comes to perfect matches, Dating Group’s acquisition of Cupid Media serves as a perfect example. In July of 2021, Dating Group acquired Cupid Media in a deal worth $51 million. The merger opened several new markets and made Dating Group the world’s largest global dating company, with more than 140 million users, 45 dating apps in its portfolio and 100 countries covered by its products. Its diverse portfolio of popular relationship-based services now includes Dating.com, Once, XOXO, Tubit, DilMil, Cupid Media’s portfolio of 33 sites and more.
Dating Group’s acquisition of Cupid Media created an enterprise with projected annual revenue of $300 million, with a valuation that’s in the billions of dollars. If Dating Group were to go public, it would rank alongside Match Group and Bumble in terms of market potential. According to one source, the global online dating market was valued at $7.05 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 5.6% through to 2028, when it will reach $11 billion.
(Bill Alena, Chief Investment Officer at Dating Group)
“The acquisition of Cupid Media has been an incredible success story,” said Bill Alena, Chief Investment Officer at Dating Group and head of its corporate VC fund. “Dating Group benefitted by gaining access to new markets and Cupid Media was infused with additional resources that have helped it scale rapidly. Employees and customers have also benefited from the synergies created by the combined companies.”
Cupid Media’s Business Grows
A short eight months after the acquisition was finalized, Cupid Media recorded its best month ever. In March 2022, the company’s revenue exceeded $4 million, breaking records in the US, European and Latin American markets. The company also secured 1.2 million new customers, who exchanged more than 135 million messages on the company’s sites and apps. Total first-quarter revenue for Cupid Media was $11.3 million, with April bringing 2022 totals to $15.2 million and year-over-year growth of 17%.
“We are fortunate to have joined forces with such a great partner,” said Jason Johnson, Chief Marketing Officer of Cupid Media. “Dating Group’s investment philosophy and approach to M&A should become the industry standard. Rather than a takeover, the acquisition has been more of an investment in our teams, our products and our customers. It truly is a partnership.”
The secret to M&A success seems to be in how companies approach their work after the deal is done. According to Alena, the first priority should be setting expectations and aligning organizational culture.
Alignment is the Key to Success
“Creating the space for teams to discuss issues and concerns is a critical first step,” said Alena. “Doing so will result in higher employee satisfaction, better retention of employees and clients, and often improved earnings. Taking the time to discuss what’s most important for each company and aligning on those things is a sure way to create a culture that benefits everyone.”
One of the biggest things that Dating Group and Cupid Media have aligned on is the future of digital intimacy. And for the newly combined enterprises, the future is all about social discovery.
To help shed light on what that means, Dating Group Chief Strategy Officer KJ Dhaliwal said, “Personal connections aren’t always about romance. Relationships can be for friendship, entertainment, hobbies, travel, business and more. And that’s social discovery, which is all about people connecting around mutual interests and creating lasting relationships around the things they enjoy.”
A Hint About Dating Group’s Future
Whether Dating Groups will acquire, be acquired, or jump towards an IPO is still a mystery. But the company’s Chief Investment Officer leaves a hint as to what could be next. According to Alena, Dating Group will continue to invest in or acquire companies that fit its vision for the future of social discovery.
“We are a future-focused social discovery company and will continue to invest in projects and companies that create meaningful interactions between people with innovative technologies,” he said. “We are building, investing in, and acquiring platforms where people from around the world can meet, become friends, and spend time together in meaningful ways.”
Dating Group’s views on the future of dating also align with those of its parent company, Social Discovery Ventures (SDVentures), which is a global technology company focused on connecting people through social discovery and designing Social Life 3.0. SDVentures’ products include dating apps operated by its subsidiary Dating Group and new social and entertainment apps built by SDV Lab. More than 140 million people across 100 different countries enjoy SDVentures’ technologies.
