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| Home - Software M&A Review - Sep 03 Issue |
Software M&A – Opportunity in Adversity
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Intuit (Nasdaq:INTU) to acquire Innovative Merchant Solutions
Category: Merchant account services
Purchase Price: $116,000,000
Seller Revenue: $25,000,000
Revenue Multiple: 4.64x
Payment Terms: Cash
SEG’s Perspective:
Intuit’s buying spree continues, driven by its “beyond accounting” growth strategy. The latest addition is Innovative Merchant Solutions, a provider of merchant account services to small businesses. Intuit, which already has a modest merchant services operation, gains access to 85,000 IMS merchants and a much stronger presence in the highly profitable bankcard processor sector. Note the all cash purchase price has contingencies, most likely an earnout.
Plato Learning (Nasdaq:TUTR) to acquire Lightspan (Nasdaq:LSPND)
Category: Educational software
Purchase Price: $32,970,000EV
Seller Revenue: $50,000,000
Revenue Multiple: 0.66x
Payment Terms: Stock
SEG’s Perspective:
After racking up substantial losses, ($33.5 million on $50 million revenue in fiscal year ’03) and with only enough cash to fund two more quarters, education software vendor Lightspan sells to Plato Learning, a financially challenged provider of e-courseware to community colleges. Plato, which lost $5.7 million of operating income on $78 million in revenue during the last twelve months, hopes to beef up its presence in Lightspan’s K-12 market.
SSA Global Technologies acquires EXE Technologies (Nasdaq:EXEE)
Category: Warehouse management/supply chain management
Purchase Price: $16,026,000EV
Seller Revenue: $73,656,000
Revenue Multiple: 0.22x
Payment Terms: Cash
SEG’s Perspective:
Enterprise software provider SSA Global Technologies nabs struggling EXE, the latest in its series of acquisitions. EXE’s highly regarded warehouse management/supply chain execution software will extend SSA’s ERP offerings to the mid-market. While EXE’s revenues have been flat, it reigned in expenses to near breakeven and had $32M in cash, making the .22x purchase price appear curiously low. SSA, which earlier acquired Baan, Infinium and interBiz, has a record of picking up deals on the cheap.
Stellent (Nasdaq:STEL) acquires Ancept
Category: Digital asset management
Purchase Price: $2,770,000
Seller Revenue: $ 4,500,000 (estimate)
Revenue Multiple: 0.62x
Payment Terms: Stock, cash and earnout
SEG’s Perspective:
The content management sector consolidated further as Stellent picked up small, privately-held digital asset management vendor Ancept, an IBM partner. After Stellent competitors Documentum and Interwoven recently acquired digital asset management developers (Bulldog and MediaBin), Stellent had little choice but to embed the technology in its offering. Ancept shareholders receive $2M in cash and 100,000 shares of Stellent stock.
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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