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| Home - Software M&A Review - July 09 Issue |
Software M&A Insights: Infrastructure and Applications Software Still Find Buyers |
By Kris Beible, Analyst – Software Equity Group, LLC
Buyers in the infrastructure and applications software markets continue
to remain. Deals highlighted this month include Infor’s acquisition of
SoftBrands, a leading provider of mid-market ERP software; Intel’s acquisition
of WindRiver, a developer of operating systems and middleware software and the
leveraged buy-out of MSC Software, a provider of engineering simulation software
to product manufacturers.
To sign up for Software Equity Group’s complementary Quarterly and Monthly
Software Industry Research Reports, which provide a comprehensive analysis of
recent deals, valuations and trends in the M&A and public markets, please visit
their website (
http://www.softwareequity.com). Software Equity Group’s 2008 Annual Software
Industry Equity Report, which is a comprehensive analysis of 2008 software
industry public stock market performance, initial public offerings, mergers and
acquisitions, and venture capital and private equity financings, is available
for purchase at their website.
Infor acquires SoftBrands (AMEX: ABN)
Category: Manufacturing and Hospitality ERP Software
Purchase Price: $80,520,000EV
Seller Revenue (TTM): $99,700,000
Seller EBITDA (TTM): $13,370,000
Revenue Multiple: 0.8xEV
EBITDA Multiple: 6.0xEV
Payment Terms: Cash
SEG’s Perspective:
Golden Gate Capital backed Infor Global Solutions acquires Softbrands, a
provider of mid-market ERP software. The acquisition provides Infor further
penetration down market and extends the company’s expertise in the manufacturing
and hospitality markets. Additionally, it breathes new life into the company’s
traditional inorganic growth strategy. Since making acquisitions of 6 companies
in 2004, 9 companies in 2005, 7 companies in 2006, and 3 companies in 2007,
Infor failed to announce any new transactions – leading to rumors the software
titan did not have the cash to continue purchasing smaller entities. Infor’s
$0.92 per share tender offer represents a 100% premium over Softbrands’
pre-announcement last day closing stock price.
Intel acquires WindRiver Systems (NASDAQ: WIND)
Category: Operating Systems Software
Purchase Price: $793,400,000EV
Seller Revenue (TTM): $354,270,000
Seller EBITDA (TTM): $38,070,000
Revenue Multiple (TTM): 2.2x EV
EBITDA Multiple (TTM): 20.8x EV
Payment Terms: Cash
SEG’s Perspective:
Hardware computing behemoth, Intel, moves into software through its acquisition
of WindRiver Systems, a provider of operating systems, middleware and
development tools for the device market. The acquisition provides market-leading
and complementary software assets to help further grow Intel’s presence within
the embedded systems and mobile device markets. It also reinforces Intel’s
stated intentions to move beyond its traditional stronghold in the PC market,
and diversify its revenue model to offer more than semiconductors. The
acquisition also falls short of creating conflict between Intel and its largest
ally, Microsoft, because WindRiver’s operating system solutions are not targeted
at the PC market. However, it could hurt Microsoft’s hopes for products like
Windows Mobile and Windows Embedded. Intel’s $11.50 per share tender offer
represents a 44% premium over WindRiver’s pre-announcement last day closing
stock price.
Symphony Technology and Elliot Management acquire MSC Software (NASDAQ: MSCS)
Category: Engineering Software
Purchase Price: $198,760,000EV
Seller Revenue (TTM): $246,790,000
Seller EBITDA (TTM): $22,540,000
Revenue Multiple (TTM): 0.8x EV
EBITDA Multiple (TTM): 8.8x EV
Payment Terms: Cash
SEG’s Perspective:
Private equity firms, Symphony Technology Group and Elliot Management, acquire
MSC Software, a provider of simulation software and services to product
manufacturing industries. The low multiple represents traditional private equity
financial engineering. Over the past several years, MSC Software has seen its
EBITDA and recurring maintenance (+50% of revenue) revenues steadily increase,
while letting its license software and services revenue streams steadily
decline. The $7.63 per share tender offer represents a 13% premium over MSC
Software’s pre-announcement last day closing stock price.
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.
For more, please visit
www.softwareequity.com
 
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