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| Home - Software M&A Review - Dec 03 Issue |
Software M&A - Fall Deals
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Symantec (Nasdaq: SYMC) acquires ON Technology (Nasdaq: ONTC)
Category: IT administration tools
Purchase Price: $81,660,000EV
Seller Revenue: $37,500,000
Revenue Multiple: 2.16x
Payment Terms: Cash
SEG’s Perspective:
Symantec further expands its administration software line with the acquisition of ON Technology, a leading provider of software distribution and configuration management solutions. Symantec, which had focused primarily on enterprise security software, has been building out storage management and IT administration product lines through a series of strategic buys, including September’s purchase of PowerQuest. Through acquisitions, the company has successfully redefined itself as an enterprise infrastructure solution provider.
Symantec (Nasdaq: SYMC) acquires PowerQuest
Category: Storage management
Purchase Price: $150,000,000
Seller Revenue: $50,000,000
Revenue Multiple: 3.00x
Payment Terms: Cash
SEG’s Perspective:
Symantec, which opted a few years ago to focus primarily on Internet and network security, beefs up its admin software offering by acquiring PowerQuest, a provider of storage management, configuration and disaster recovery solutions using imaging technology. If purchase price is any reflection of perceived strategic importance, security software remains paramount for Symantec. The respectable 3x multiple (all cash) it paid for PowerQuest pales in comparison to the 5x and 6x multiples it shelled out last summer for four software companies specializing in Internet and system security.
Symantec (Nasdaq: SYMC) acquires SafeWeb
Category: VPN
Purchase Price: $26,000,000
Seller Revenue: $2,500,000**
Revenue Multiple: 10.4x
Payment Terms: Cash
SEG’s Perspective:
While extending its business into IT administration and storage management, Symantec continues to tout itself as the leader in enterprise security software, as evidenced by its purchase of SafeWeb, a VPN appliance provider enabling secure remote access to enterprise networks without VPN client software. Here’s a good example of today’s “technology buy”; the gee-whiz factor of SafeWeb’s IP helps justify the 10.4 multiple.
Vignette (Nasdaq: VIGN) acquires Intraspect Software
Category: Content management
Purchase Price: $20,000,000
Seller Revenue: $17,500,000**
Revenue Multiple: 1.14x
Payment Terms: Stock, cash
SEG’s Perspective:
Struggling content management/portal provider Vignette buys Intraspect, a developer of enterprise collaboration software. Following Documentum/eRoom, Interwoven/iManage and Open Text/Corechange, it’s clear now that collaboration software will be subsumed into other offerings (e.g., supply chain, content management) rather than continue as a standalone solution. Intraspect’s Java-based offering was a key attraction to Vignette, which now touts the only all-Java suite of content, collaboration and portal apps. One-half the purchase price is in Vignette stock.
EV: Enterprise Value = equity purchase price, plus seller’s interest bearing debt, minus seller’s cash & cash equivalents
**: SEG estimate.
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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