Totvs buys RD Station in Brazil's largest software M&A deal

Brazilian enterprise software giant Totvs has announced the acquisition of RD Station, the largest player in the marketing automation space for 1,86 billion reais (US$ 32.5 million), in the country's largest private M&A deal in the software sector so far.

The acquisition of the 92% stake in the startup, with an enterprise value of 2 billion (US$ 348 million) is part of Totvs's strategy to broaden its portfolio of offerings that range from enterprise resource planning systems to management tools and systems in the techfin space, with products that allow companies to embed financial services to enhance their own propositions.

In addition to expanding its addressable market, Totvs sees the acquisition as a means to boost customer loyalty and add value to its users through an enhanced presence in the business performance space.

"Without a doubt, the merger of two Brazilian companies that are pioneers in the technology space is an unprecedented milestone to consolidate an ecosystem of B2B technologies in Brazil and the world", noted Dennis Herszkowicz, chief executive at Totvs.

Totvs claims to have about 50% of the Brazilian enterprise software market; the company has a traditionally large footprint in the small and medium business (SMB) space. The firm placed its bets on a shift to the software-as-a-service (SaaS) model in 2016, a move that was initially painful for the company, but paid off later: SaaS currently accounts for 65% of new business, while subscriptions represent 80% of the company's business overall.

With the new acquisition, Totvs will boost its SaaS capabilities with RD Station's SMB-focused marketing automation and customer relationship management platforms. The Brazilian enterprise software giant also sees the potential to add new resources to the startup's platform and scale it through a product-led growth strategy.

Founded in 2011 by Eric Santos and four other entrepreneurs, RD Station expects net revenue for 2021 to reach approximately 206 million reais (US$ 36 million), an average compound growth rate of 46% since 2016. Following the deal, Santos will continue to lead the company's marketing automation efforts and RD's pre-existing plans of national and international expansion.