Insights
Gimbal Inc: Pandemic Business Pivot that Transformed Revenue
By Daisy Lin
How micro-location technology company Gimbal clinched a complex acquisition deal of true[X] using asset-based financing.
Every brand faces the challenge of reaching their customers with the right product, at the right place, at the right time, and on the right platform. Technology company Gimbal Inc. helps companies do this by bridging the physical and digital worlds—drawing on customer location information, and personalizing customer messages online and in physical locations.
“The way we think about it is how can we improve the experience for the end user,” says Rob Emrich, CEO of Gimbal. “So if you are an existing consumer of one of our customers, a retailer for instance, and you've opted in to let that company use your location, we can help you find or navigate to a store, or notify you about a sale that's happening, or suggest other products you might be interested in. It’s based on a set of rules that the customers create.”
At the start of 2020, Gimbal’s technology was in demand and business was thriving. Then, the pandemic hit. City after city began to shut down, and people suddenly stopped going out. This drastic shift in behavior set the location technology industry on its head.
“When people aren’t leaving the house, we’re just not as useful to our customers,” Emrich says. “It was really unexpected and had a detrimental impact on our business.”
Gimbal had to pivot—and fast. Emrich had his sights set on true[X], a subsidiary of Disney that builds advertising products for premium video. Its ad placement model gives connected TV, streaming, and online audiences the option to interact with an ad, in exchange for fewer or no commercial interruptions for the rest of the program. By building consent into the equation, the company can capture a higher quality level of attention for its ads. True[X] has worked with Microsoft, Apple, Coca-Cola and other major brands for ad placements on Hulu, A+E, Fox, and more.
“True[X] was a great strategic fit for us, but it became even more important once the pandemic hit,” Emrich says.
Crunch time
True[X] may have been the perfect product for the pandemic binge-watching audience and the ideal candidate for an acquisition, but some major hurdles were ahead.
Disney and Gimbal agreed to an aggressive deadline to close. That meant the bank financing had to be secured in weeks, not months, which is record time for such a complex transaction. The clock began ticking, and Emrich turned to East West Bank for help.
Complicating the matter was that since true[X] was a division of Disney, it didn’t have independent audited financial documentation, like quarterly earnings, which is usually needed to be approved for a loan. The bankers had to be entrepreneurial and find other ways to validate the financials. The idea that they struck upon was to provide a revolving asset-based line of credit, using Gimbal’s assets as collateral.
“We took a hard look, and we were able to assess actual risk, which was lower than the perceived risk,” says Kelvin P. Chan, managing director of East West Bank’s Bridge Banking team. “This is very unique since we used short-term debt to finance the acquisition of a long-term asset.”
Financing an ABL loan facility
To verify true[X]’s financial standing, Clayton Kwai, senior vice president of the Asset Based Lending (ABL) team, performed an exhaustive collateral audit analyzing the company’s accounts receivables to confirm that it had strong payouts and a solid source of repayment.
“If we require a standard quality of earnings report to be performed, it would have taken at least four to five weeks. As such, we came up with the ABL loan structure,” says Chan. “We had to be flexible and creative.”
“They just committed to seeing it through. It was like East West Bank put together a SEAL team. I don't know how else to describe it,” Emrich says. “Every decision maker from the bank got into the room. We talked with them directly, including Dominic Ng, CEO of East West Bank.”
With multiple teams working around the clock and on weekends, the loan was funded three days before the deadline.
“I'd never closed the deal without meeting the counterparty in person, ever,” Emrich says. “I feel like I owe everybody on the East West team a debt of gratitude because of how quickly they worked through everything.”
“It has turned out to be an incredible acquisition for us. We're a stronger company post-acquisition than we were before.”
The future
Gimbal and true[X] are now integrating their technologies to build out one of the largest addressable TV ecosystems. This will allow the customers of both companies to have far more control over how to allocate their TV dollars. The combined companies have seen a dramatic financial impact as more customers come on to the unified platform. Emrich says Gimbal is expecting to post almost 90% revenue growth year over year.
“It has turned out to be an incredible acquisition for us. We're a stronger company post acquisition than we were before,” Emrich says. “The teams are coming together and the company is growing rapidly, and I feel like we have a real partner for growth in East West Bank.”
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