Novacap acquires ad tech firm Cadent for $600M

Novacap has acquired New York-based ad tech firm Cadent from Lee Equity Partners in a deal worth about $600 million.

Why it matters: This deal is one of the largest ad tech acquisitions of the year, and the acquirer is promising more M&A in the future.

What they're saying: Cadent CEO Nick Troiano tells Axios that Novacap was interested in providing more investment capital not only for internal growth but also for acquisitions.

• "We joke a lot about fragmentation of audiences. There's a lot of fragmentation of providers in the ad tech space. The market requires unification and automation, and by default, there's a consolidation play," Troiano says.

Details: The deal is the fourth investment in Novacap's TMT VI Fund, following Static Media, Plusgrade and Syntax.

• "We are at the beginning of a fundamental shift in TV advertising, and with strategic investments and acquisitions we believe Cadent will continue to propel forward as an innovator in the converged marketplace," Novacap principal Samuel Nasso said in a statement.
• Evercore served as the lead financial adviser, Stifel as co-adviser and Weil, Gotshal & Manges LLP as legal adviser to Cadent and Lee Equity Partners.
• RBC Capital Markets, TD Securities and Scotiabank served as financial advisers and provided financing to Novacap. Baker Botts LLP served as legal adviser.

Catch up quick: Founded in 2007, Cadent (then known as Cross MediaWorks) started selling ads on cable TV by consolidating unsold inventory across local markets. It later expanded to broadcast and advanced TV and now positions itself as "omnichannel," Troiano says.

• The company has always been private equity backed. Lee Equity Partners acquired Cadent from Clarion Capital Partners in 2013.
• Cadent has grown through several acquisitions. In 2015, it acquired BlackArrow, where Troiano was CEO and then assumed the larger role. It acquired connected TV ad platform 4INFO in 2020 and SSP platform EMX in May.

By the numbers: Troiano says Cadent is "very profitable" and has tripled its profitability since he joined in 2015.

• It's grown net revenue about 15% to 20% year over year since 2008, he says.
• Cadent has about 375 employees.