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November 08 Issue
Software M&A Insights: Deals Going Strong in 4Q08
By Ken Bender, Managing Director and Kris Beible, Analyst – Software Equity Group, LLC
Amid significant macroeconomic turmoil, M&A deal activity within the
software sector continues to show strength in 4Q08. Deals highlighted this month
include eBay’s acquisition of Bill Me Later, a leading provider of digital
payments solutions; Hewlett Packard’s purchase of mid-market storage management
software vendor LeftHand Networks, and Oracle’s acquisition of Primavera, the
largest pure-play provider of project portfolio management software.
eBay (NASDAQ: EBAY) acquires Bill Me Later
Category: Ecommerce Software
Purchase Price: $945,000,000
Seller Revenue (TTM): $150,000,000 (estimate)
Revenue Multiple (TTM): 6.3x
Payment Terms: Cash and Options
Online auction provider, eBay, acquires Bill Me Later, a leading provider of
deferred payments and promotional financing solutions to online retailers.
Through its acquisition of Bill Me Later, eBay adds a complementary merchant
base of over 1000 online merchants (including Walmart, Apple and Amazon),
further leverages its low-cost business advantage offered to retail merchants
and will own the two most popularly used online payment brands worldwide.
Additionally, the combination of PayPal and Bill Me Later will give online
consumers the option of paying for items immediately or overtime. Bill Me
Later’s credit risk modeling and analysis solutions, which enable online
retailers to offer transactional credit to consumers at the point of sale, has
consistently performed better than the consumer credit industry average.
Hewlett Packard (NYSE: HPQ) acquires LeftHand Networks
Category: Storage Management Software
Purchase Price: $360,000,000EV
Payment Terms: Cash
Hewlett Packard acquires LeftHand Networks, a leading provider of low-cost
storage virtualization and iSCSI storage area network solutions. Through its
acquisition of LeftHand Networks, HP further penetrates the growing iSCSI/IP SAN
market, which IDC projects will grow to $4.4 billion by 2012 and extends its
virtualization portfolio to the mid-market, as well as remote and branch offices
of large corporations. Dell extended its reach into the iSCSI mid-market earlier
this year by acquiring EqualLogic, another low-cost iSCSI SAN solution vendor.
LeftHand follows acquisitions of Colubris Networks, EDS ($14.2 billion, 0.6xEV
TTM revenue), Tower Software Engineering ($109 million, 2.4xEV TTM revenue) and
Exstream Software ($720 million, 7.2x TTM revenue estimate), as HP’s fifth
acquisition in 2008.
Oracle (NASDAQ: ORCL) acquires Primavera
Category: Project Portfolio Management Software
Seller Revenue: $175,000,000 (estimate)
Enterprise software behemoth, Oracle, acquires Primavera, the largest pure-play
provider of project portfolio management (PPM) software. Oracle Projects, which
has robust cost management, project resource allocation, contract management and
planning features, has historically relied on integrations to Microsoft Projects
and Primavera for full project scheduling – Primavera’s flagship P6 scheduling
product fills this hole and further extends Oracle’s reach into project
intensive industries (including engineering, construction, aerospace and
defense, utilities, oil and gas, manufacturing and professional services.
Additionally, there may be an opportunity to extend Primavera’s
manufacturing-focused PPM solutions to complement PLM products acquired through
Oracle’s 2007 acquisition of Agile Software ($332.5EV, 2.6xEV TTM revenue).
Primavera follows 2008 acquisitions of SaaS PPM vendors Projity and OpenAir
($26.9 million), by Serena Software and Netsuite, respectively.
Software Equity Group is an investment bank and M&A advisory
serving the software and technology sectors. Founded in 1992, the firm has
represented and guided private companies throughout the United States and
Canada, as well as Europe, Asia Pacific, Africa and Israel. They have advised
public companies listed on the NASDAQ, NYSE, American, Toronto, London and
Euronext exchanges. Software Equity Group also represents several of the world's
leading private equity firms. They were recently ranked among the top ten
investment banks worldwide for application software mergers and acquisitions.
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