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| Home - Software M&A Review - Aug 03 Issue |
Software M&A: Q3 in Review
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Intuit (Nasdaq:INTU) acquires Income Dynamics
Category: Tax preparation software
Purchase Price: $10,000,000
Seller Revenue: $3,500,000 (estimate)
Revenue Multiple: 2.86x
Payment Terms: Stock
SEG’s Perspective:
Financial software behemoth Intuit reenters the acquisition fray, this time buying Income Dynamics, a maker of taxpayer tools that will strengthen market-leading TurboTax by giving it the power to easily estimate the value of items donated to charities. This is Intuit’s first acquisition since it bought IT resource and tracking firm Blue Ocean Software for $170 million in August 2002. Income Dynamics revenues are estimated to be $3.5M.
The Sage Group to acquire Timberline Software (Nasdaq:TMBS)
Category: Enterprise software for construction and real estate
Purchase Price: $91,850,000EV
Seller Revenue: $63,100,000
Revenue Multiple: 1.46x
Payment Terms: Cash
SEG’s Perspective:
The Sage Group follows through on its promise to add vertical business tools for the midmarket with its acquisition of Timberline. Looks like Sage may be mimicking the vertical acquisition strategy Intuit began nearly two years ago. Sage paid Timberline shareholders a 33 percent premium to get the company’s integrated operations/financial tools for medium-sized construction and real estate outfits. The buy gives U.K-based Sage and U.S. subsidiary Best Software a shot at holding onto its current customers as they outgrow the pair’s entry-level offerings.
SCO Group (Nasdaq:SCOX) acquires Vultus
Category: Developer tools
Purchase Price: $2,700,000
Seller Revenue: $1,250,000 (estimate)
Revenue Multiple: 2.16x
Payment Terms: Stock
SEG’s Perspective:
SCO Group, a provider of tools and services for Linux developers that has seen its stock price rocket upward six fold since filing a $1B IP infringement suit against IBM, appears to be taking advantage of its new found wealth, with its all stock asset purchase of Vultus Technology, a developer of tools used to design Web app interfaces. This is the first of what SCO identifies as a string of $4 to $10M strategic acquisitions. Sellers beware.
Secure Compuing (Nasdaq:SCUR) to acquire N2H2 (NTWO.OB)
Category: Content filtering
Purchase Price: $15,813,000EV
Seller Revenue: $11,100,000
Revenue Multiple: 1.42x
Payment Terms: Stock
SEG’s Perspective:
Network security provider Secure Computing acquires content-filtering competitor N2H2, seeking to boost its number-three position in content filtering. Secure also picks up 2, 000 new customers. Secure paid 1.4 times TTM revenue after factoring in N2H2’s cash and debt. The deal gives N2H2’s shareholders a 38 percent return based on a five-day preceding average, not bad considering the quarter ended June 2003 was the first time N2H2 recorded a profit…of $48,000.
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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