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| Home - Software M&A Review - Aug 04 Issue |
Software M&A - Second Quarter Review
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Symantec (NASDAQ: SYMC) acquires TurnTide
Category: Anti-Spam
Purchase Price: $28,000,000
Seller Revenue: $1,700,000 (Estimate)
Revenue Multiple: 16.5x
Payment Terms: Cash
SEG’s Perspective:
Enterprise security software provider Symantec acquires TurnTide, a startup anti-spam software developer. The deal comes less than two months after Symantec paid $370 million for anti-spam solution provider Brightmail. Symantec touts the two acquisitions as complementary, with TurnTide’s technology installed on network routers to slow down a spam sender’s system, and Brightmail installed on the messaging network. The enterprise anti-spam market is expected to reach $979 million this year. TurnTide began business 5 months before the acquisition with $1 million in funding from founder Josh Kopelman, whose previous company Half.com was acquired by eBay for $241 million only 6 months after its website went live.
Systems Union Group (London AIM: SUG) acquires Lasata
Category: Business Intelligence
Purchase Price: $18,500,000
Seller Revenue: $10,800,000
Revenue Multiple: 1.7x
Payment Terms: Cash, Stock
SEG’s Perspective:
Systems Union Group (SUG), a UK based provider of BI, financial and business management software, acquires Lasata, an Australian developer of data analytic and business intelligence software capable of handling multiple formats and disparate applications. Lasata, which has OEM’d its software to SUG for several years, will be integrated into the business intelligence division, formed in 2003 following SUG’s acquisition of MIS (based in Germany). SUG’s Business Intelligence division contributes some 32% of its revenue. Lasata’s 75,000 users in 158 countries may provide much needed cross-sell opportunities for SUG, which saw new license revenue decline for the past 2 years to 29% of total.
TIBCO Software (NYSE: TIBX) acquires Staffware (London: STW)
Category: Logistics Software
Purchase Price: $217,000,000
Seller Revenue: $75,000,000
Revenue Multiple: 2.9x
Payment Terms: Cash, Stock
SEG’s Perspective:
Tibco Software, provider of business integration software, acquires Staffware, a UK-based provider of business process management software used by banks for loan approvals and mortgage applications. The purchase price represents a 40% premium over Staffware’s closing price preceding announcement of the deal, prompting investors to drive Staffware’s share price up 36% the next day. Tibco, which saw revenue decrease 3.4% last year, was attracted by Staffware’s growth and 20% EBITDA. Equally attractive was Staffware’s strength in banking and insurance, and established presence in Europe and Asia Pacific.
WebMD (NASDAQ: HLTH) acquires ViPS
Category: Health Care Software
Purchase Price: $160,000,000
Seller Revenue: $58,300,000
Revenue Multiple: 2.7x
Payment Terms: Cash
SEG’s Perspective:
Continuing an acquisition spree of 22 companies in 2002 and 12 companies in 2003, WebMD acquires ViPS, a provider of decision support, claims processing and fraud prevention solutions to the Government, Blue Cross – Blue Shield plans and commercial health payers. In addition to providing ready access to these key target markets, ViPS will add some $17 million to WebMD’s bottom line. The $160 million purchase price includes certain assumed liabilities and will be paid in cash. Once a subsidiary of First Data, ViPS was taken private by investment firm Cornerstone Equity Investors in 1998 for $48 million with revenue of approximately $24.5 million.
WorkStream (NASDAQ: WSTM) acquires Kadiri
Category: Enterprise Compensation Management Software
Purchase Price: $12,500,000
Seller Revenue: $6,400,000
Revenue Multiple: 2.0x
Payment Terms: Stock
SEG’s Perspective:
WorkStream, a provider of hosted Enterprise Workforce Management software, acquires venture capital backed Kadiri, a developer of Enterprise Compensation Mangement software. WorkStream, with less than $4.4 million in the bank and $17 million in revenue, convinced Kadiri shareholders to take $12.5 million in WorkStream stock and potentially $2.7 million more in earnout. In April, WorkSteam acquired PeopleView, an OTC traded workforce management software provider. The Enterprise Compensation Management space has been unusually active, with Callidus (NASDAQ: CALD) going public in November 2003, and Advanced Information Management being acquired by Authoria in May, 2004.
EV: Enterprise Value = equity purchase price, plus seller’s interest bearing debt, minus seller’s cash & cash equivalents
This report was prepared by Software Equity Group, L.L.C. (SEG), a mergers and acquisitions advisory firm serving the software, life science and technology sectors. SEG is solely responsible for its content. This material is based on data obtained from sources we deem to be reliable; it is not guaranteed as to its accuracy and does not purport to be complete. This information is not to be used as the primary basis of investment decisions. For more, please visit www.softwareequity.com, or phone (858) 509-2800.
 
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