CommerceHub may eye liquidity event by late 2024

CommerceHub foresees a potential liquidity-like event toward the end of 2024 after it has had time to digest its merger with ChannelAdvisor, CEO Bryan Dove tells Axios exclusively.

Why it matters: Any deal for the retail technology provider — which boasts Insight Partners, Sycamore Partners, GTCR and UPS as investors — would have a valuation in the multibillion-dollar range.

Driving the news: CommerceHub recently divested ChannelAdvisor's shoppable media and brand analytics product lines to MikMak.

• It also struck a deal with Alibaba's European marketplace Miravia.

Details: CommerceHub's options include an IPO, a sale, and bringing in new investors — or seeing its existing investors re-upping for another five-to-seven years, Dove says.

• While the company is large and profitable enough to be a sustainable, durable public company, there's no "emotional bind" to an IPO, he says.

What they're saying: CommerceHub completed its $663 million merger with ChannelAdvisor late last year and is still in integration mode, Dove notes.

• "People want to feel like they're investing in one consolidated, unified business, not two different parts," he says.
• "From an investor perspective, you want to invest in a business that's had, let's call it, a post-integration year under their belt," Dove explains.
• That means getting through most of 2024 before a transaction becomes a "substantial, material conversation," he says.

Of note: "The number of banks and bankers that are skilled at the multi-billion range is a pretty small network," Dove says.

• "Our investor base has relationships with all of them," he points out.
• "As and when that time comes, we'll find the right partner for us," Dove says.
• On the ChannelAdvisor deal, CommerceHub worked with financial advisers Stifel and District Capital Partners.

Catch up fast: CommerceHub was taken private by PE firms Sycamore and GTCR in 2018 for $1.1 billion.

• In 2020, Insight acquired a majority stake in a deal that valued the fulfillment network at $1.9 billion, though Sycamore and GTCR retained minority stakes.

• Before its deal with ChannelAdvisor closed, the company brought on board shipping company UPS as a strategic investor, though the amount was not disclosed.
• In addition, CommerceHub secured about $220 million in debt financing last year, per PitchBook.

By the numbers: The company generated more than $50 billion in gross merchandise value (GMV) annually.

• Dove says the company, given its size, grows at an annual rate similar to e-commerce overall.

How it works: The company provides software solutions to more than 40,000 retailers and brands globally tied to drop shipping, marketplaces, digital marketing and delivery management.

• CommerceHub gives retailers access to unowned inventory, while ChannelAdvisor helps brands and suppliers connect to retailers around the world.
• The thesis in bringing the two businesses together was to provide a suite of products and services to both retailers and suppliers, Dove says.

Zoom in: CommerceHub counts most large retailers as clients, including Walmart and Costco.

• Many retailers work with CommerceHub when preparing to launch their own marketplaces, Dove says.