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| Home - Software M&A Review - Mar 06 Issue |
Software M&A - A Glimpse into Q1
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Dassault (NASDAQ: DASTY) Acquires MatrixOne (NASDAQ: MONE)
Category: Product Lifecycle Management (PLM)
Purchase Price: $309,400,000EV
Seller Revenue: $118,780,000
EBITDA: ($24,280,000)
Revenue Multiple: 2.6xEV
Payment Terms: Cash
SEG’s Perspective:
Dassault, a billion dollar revenue CAD/PLM software developer, acquired MatrixOne, a provider of PLM solutions. MatrixOne primarily addresses Dassault's relative weakness in the product data management and collaboration segment of the PLM category. The acquisition also brings significant cross sell opportunities with only 40% customer overlap. Where Dassault has traditionally focused on automotive, aerospace & defense, and industrials/capital goods, MatrixOne brings expertise in high tech (49% of software revenues), apparel, life sciences and medical devices. MatrixOne, along with Dassault's 2005 acquisition of Abaqus (in the simulation category of PLM), provide Dassault with more revenue from higher growth segments of the broader PLM market. Dassault will now generate 50% of its revenues from businesses that have end market growth of approximately 15% with the remaining 50% of its revenue generated from its traditional CAD business, where the market is growing at approximately 5%.
EV: Enterprise Value = equity purchase price, plus seller's interest bearing debt, minus seller's cash & cash equivalents.
Mercury Interactive (NASDAQ: MERQ) Acquires Systinet
Category: Enterprise Application Integration
Purchase Price: $105,000,000
Seller Revenue: $23,000,000 (estimate)
Revenue Multiple: 4.6x (estimate)
Payment Terms: Cash
SEG’s Perspective:
Mercury Interactive, a leader in business technology optimization, acquired Systinet, provider of governance and lifecycle management solutions for service-oriented architectures (SOA). Systinet's core product is a registry that manages the lifecycle of an SOA-based service, specifying who can publish and when, and what policies govern the service. Industry pundits anticipate SOA architectures will receive an increasing share of IT spending and Systinet will help Mercury capitalize on this trend. Mercury's leverage and resources will differentiate Systinet from its main rivals, privately held SOA Software and Infravio. Founded in 2000, Systinet raised an estimated $27.4 million in VC financing; investors should be pleased at the outcome.
Verisign (NASDAQ: VRSN) Acquires CallVision
Category: Billing & Service Provisioning Software
Purchase Price: $30,000,000
Seller Revenue: $6,600,000 (estimate)
Revenue Multiple: 4.6x (estimate)
Payment Terms: Cash
SEG’s Perspective:
Verisign, a provider of security and infrastructure services for internet and telecommunications networks, acquired CallVision, a provider of online analysis applications. CallVision clients (T-Mobile, Qwest, TelstraClear) use its applications to derive business and customer intelligence from billing information. CallVision's applications will be incorporated into Verisign's Wireless Commerce Suite. Verisign's communications and commerce group, as opposed to its highflying Internet Services Group (28% growth YOY), had roughly flat revenue growth in 2005 (down 5% YOY). CallVision had been an active acquirer itself, buying competitor OneLink in 2003 and in 2004 OmniChoice, a provider of analytic applications.
WebSideStory (NASDAQ: WSSI) Acquires Visual Sciences
Category: Data Analysis & Visualization Software
Purchase Price: $57,300,000
Seller Revenue: $8,000,000 (estimate)
Revenue Multiple: 7.2x (estimate)
Payment Terms: Cash, Stock
SEG’s Perspective:
WebSideStory (WSSI), a web analytics and digital marketing vendor, acquired Visual Sciences, provider of streaming data analysis and visualization software. Where WSSI is focused on web analytics, Visual Sciences provides multi-channel data analytics, which extracts data from such sources as call centers, IVR systems and electronic mail systems. Expanding beyond the Web will help WSSI assuage investor fears that Google's free web analytic software (Urchin acquisition in 1Q05) will preempt WSSI's core offering. With little product overlap and an average sale of $200 thousand to mostly large customers (compared to WSSI's approximate average sale of $70 thousand), WSSI will benefit from lucrative cross-sell opportunities. These factors, combined with Visual Sciences approximate 25% pre-tax income margins and 40% trailing revenue growth, made Visual Sciences a compelling acquisition candidate. Since its IPO in September of 2004, WSSI has used $97 million of cash and stock to acquire two companies (Atomz in 1Q05).
Software Equity Group, L.L.C. (SEG), a mergers and acquisitions advisory firm serving the software, life science and technology sectors, prepared this report. 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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