AppNexus has come a long way since prepping for an IPO two years ago. The advertising technology company founded in 2007 was once viewed as the next hot tech startup to go public, until the company shelved its IPO plans. Now, AT&T is in talks to acquire AppNexus, no longer a startup, for about $1.6 billion, according to the Wall Street Journal

AppNexus operates one of the largest digital ad exchanges, an automated advertising marketplace that allows customers to purchase space on websites and target their ideal audiences. Both of its co-founders are Princeton University grads who came from ad tech company Right Media, which Yahoo acquired in 2007. AppNexus co-founder and CEO Brian O'Kelley was Right Media's chief technology officer, while co-founder Mike Nolet served as the company's product manager and director of analytics. An internet entrepreneur since he was a teenager, O'Kelley started a web design company in high school and an e-ticket startup shortly after graduating college. Nolet worked as a business and technology consultant prior to joining Right Media.

So why didn't AppNexus go public? Shortly after the company confidentially filed to start the IPO process in 2016, Snapchat left a stain on the tech IPO market with a disastrous first six months on the NYSE. Bankers then advised AppNexus not to IPO in the wake of Snapchat's disappointing performance, according to Business Insider. AppNexus also didn't need a large cash infusion from an IPO. O'Kelley told Cheddar in February that the company was "very, very financially healthy," having raised about $344 million since its founding. AppNexus declined to comment.

Selling to AT&T makes sense for several reasons. As BI reported, ad tech firms that went public like Rubicon and Criteo have seen their values slide in recent years. AT&T is also already a large AppNexus customer. Buying the company could give AT&T a strong foothold in digital advertising and potentially help it compete with Google and Facebook. It could also provide a new revenue stream to offset the losses the company faces from people cutting the cord and moving away from traditional TV packages. If a deal is announced this week, it would come just days after AT&T won court approval for its $85 billion purchase of Time Warner.

Published on: Jun 20, 2018