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| Home - Software M&A Review - May 03 Issue |
Software M&A – Second Quarter 2003, Deals and Insight
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Kofax Imaging Products acquires Mohomine
Category: Data capture and extraction
Purchase Price: $9,000,000
Seller Revenue: $1,500,000 estimate
Revenue Multiple: 6.0x
Payment Terms: Cash
SEG’s Perspective:
Kofax, a provider of software and image-processing products for data and document capture, picks up Mohomine, a venture-backed developer of unstructured data capture. Mohomine’s patented classification and extraction technologies, which can classify up to 100 documents per second, further Kofax ’s pursuit of an end-to-end data capture solution. Kofax paid roughly 6x on LTM revenue between $1M and $2M, a relatively good return for Mohmine’s investors who received eighty cents on the dollar.
MICROS Systems (Nasdaq:MCRS) acquires Datavantage Corp.
Category: Point of sale software
Purchase Price: $52,000,000
Seller Revenue: $42,000,000
Revenue Multiple: 1.2x
Payment Terms: Cash and stock
SEG’s Perspective:
MICROS, a leader in IT services and solutions to the hospitality industry, acquires Datavantage, a provider of POS software to the likes of Starbucks, IKEA and Staples. MICROS rationalized the acquisition by pointing out hospitality businesses often have retail operations. Fact is, MICROS is bucking the current trend of staying “close to home” by moving into a new and different vertical market that is faring better than travel and hospitality. Saratoga Partners, Datavantage’s investors, earned a 43% IRR.
ScanSoft (Nasdaq:SSFT) acquires SpeechWorks Int’l (Nasdaq: SPWX)
Category: Speech recognition and text-to-speech
Purchase Price: $133,756,000EV
Seller Revenue: $36,000,000
Revenue Multiple: 3.7x
Payment Terms: Stock
SEG’s Perspective:
ScanSoft, a leading developer of digital imaging software, continues to redefine itself by picking up publicly traded SpeechWorks, a speech recognition and text-to-speech vendor. This is ScanSoft’s third acquisition in this sector. ScanSoft clearly considers SpeechWorks to be highly strategic, considering the 63% premium it paid for a company that has historically lost significant amounts of cash. ScanSoft expects the deal to be 5% accretive after eliminating $27M through headcount cuts and office consolidations.
SSA Global Technologies acquires Elevon (Nasdaq: ELVN)
Category: Knowledge / collaborative management
Purchase Price: $20,280,000
Seller Revenue: $33,000,000
Revenue Multiple: 0.6x
Payment Terms: Cash
SEG’s Perspective:
SSA GT, an enterprise software provider whose strategy is growth through acquisition, acquires Elevon, a global provider of collaborative commerce solutions. Elevon reported LTM revenue of $33M, but backing out revenue from its recently divested UK operation, actual revenue was about $21M, and the future looked bleak. Revenue fell 33% in the first quarter to $4M and the company had a net loss of $1.5M. Although the offer represents a 20% premium over Elevon’s current market cap, it’s actually less than Elevon’s $21M cash on its balance sheet.
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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