By Kris Beible, Analyst, Software Equity Group, LLC
Software M&A continues to build momentum in the first quarter of 2010. Deals highlighted this month include CA’s acquisition of Nimsoft, a leading provider of IT performance and availability monitoring solutions, Open Text’s acquisition of digital content management provider, Nstein Technologies and SuccessFactor’s purchase of Inform Business Impact, a leading provider of enterprise business analytics and workforce planning software.
CA (NASDAQ:CA) acquires Nimsoft
Category: IT Performance and Availability Monitoring
Purchase Price: $350,000,000
Payment Terms: Cash
SEG’s Perspective:
Leading IT infrastructure vendor, CA, acquires Nimsoft, a provider of IT performance and availability monitoring solutions to the mid-market enterprise sector. Nimsoft brings CA IT monitoring solutions capable of monitoring both on-demand applications such as Amazon Web Services and Salesforce.com, as well as internal applications, databases, and physical and virtual server environments. The company’s cloud-computing monitoring capabilities also bolster CA’s position in the mid-market and international markets, two areas of high growth potential for cloud application adoption. Nimsoft follows a string of recent CA acquisitions, including NetQos, Cassat, Oblicore and 3Tera, and is CA’s largest acquisition of a VC-backed company since its purchase of Wily Technology in 2006 ($375M). After investing $22M in Nimsoft over two rounds in 2007 and 2008, Goldman Sach, JMI Equity and Northzone Ventures will see a quick and hefty return.
Open Text (NASDAQ:OTEX) acquires Nstein Technologies (TSXV:EIN)
Category: Digital Content Management Software
Purchase Price: $27,410,000EV
Seller Revenue (TTM): $23,260,000
Seller EBITDA (TTM): ($400,000)
Revenue Multiple (TTM): 1.2x EV
Payment Terms: Cash
SEG’s Perspective:
Leading content management vendor, Open Text, acquires Nstein Technologies, a provider of digital asset management, web content management and text mining solutions. Through it’s acquisition of Nstein, Open Text picks up an attractive customer base and extends its product suite to offer semantic analytics technologies (text mining software), allowing customers more advanced digital search capabilities. However, Nstein’s digital asset management (DAM) and web content management (WCM) solutions significantly overlap with Open Text’s current offerings, which the company picked up through acquisitions of Artesia and eMotion (DAM) and Vignette and Hummingbird (WCM) in recent years. The modest 1.2x TTM revenue valuation is likely a function of Nstein’s flat TTM revenue growth, negative profitability and significant product overlap.
SuccessFactors (NASDAQ:SFSF) acquires Inform Business Impact
Category: Business Analytics and Workforce Planning
Purchase Price: $40,050,000
Seller Revenue (Estimate): $15,000,000
Revenue Multiple (Estimate): 2.7x
Payment Terms: Cash/Stock/Earn-out
SEG’s Perspective:
SuccessFactors, a leading provider of SaaS employee performance management software, acquires Australian based Inform Business Impact, a provider of SaaS business analytics and workforce planning software. The acquisition bolsters SuccessFactors message of providing business execution software by adding solutions geared towards enabling HR departments to use analytics effectively in making business decisions, and also adds highly complementary strategic consulting capabilities. This represents SuccessFactor’s second acquisition and first since going public in 2007. The acquisition also follows closely on the heels of Authoria’s merger with PeopleClick ($100M), both providers of SaaS talent management applications.
Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. Founded in 1992, Software Equity Group has represented and guided private companies throughout the United States and Canada, as well as Europe, Asia Pacific, Africa and Israel, and has 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 and was recently ranked among the top ten investment banks worldwide for application software mergers and acquisitions.
