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| Home - Software M&A Review - Mar 05 Issue |
Software M&A Insights: 2005 Q1 Review |
By Ken Bender, Managing Director, and Allen Cinzori, Vice President - Software Equity Group, LLC
Verisign (NASDAQ: VRSN) acquires LightSurf
Category: Mobile Messaging Software
Purchase Price $270,000,000
Seller Revenue $12,000,000 (Estimate)
Revenue Multiple 22.5x
Payment Terms: Stock
SEG’s Perspective:
Verisign beefs up its Communications Services Group, which serves wireline and wireless telecom carriers, by placing another heavy bet on mobile content delivery. This time it’s Lightsurf, a provider of picture mail and video mail solutions for wireless operators. The deal follows closely on the heals of Verisign’s acquisition of mobile content aggregator Jamba! for $273 million. Together the two acquisitions will enable Verisign to provide telecoms with solutions to satisfy the growing demand for both third-party and user generated content. It’s estimated Jamba! alone will contribute $500 million to CY2005 revenues. (NA
EMC (NYSE: EMC) acquires SMARTS
Category: Networking Software
Purchase Price $260,000,000
Seller Revenue $60,000,000
Revenue Multiple 4.3x
Payment Terms: Cash
SEG’s Perspective:
EMC continues its acquisition-driven evolution from world leader in storage management to leading provider of IT infrastructure and systems management solutions, by acquiring SMARTS, a provider of network systems management software. The acquisition puts EMC in competition with the likes of BMC, IBM (Tivoli), HP (Open View), and Computer Associates (Unicenter). EMC was attracted to SMARTS’ 85% gross margins (EMC’s 60% gross margins due to 47% of sales from hardware). EMC has made significant investments outside of the storage arena by acquiring VMWare, Documentum, and now SMARTS. In the past 18 months, EMC has spent $4 billion to acquire nine software companies.
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