By Kris Beible, Analyst - Software Equity Group, LLC
Software M&A activity in the second quarter of 2010 continues to show no signs of retreat. Deals highlighted this month include ABB’s acquisition of Ventyx, a leading provider software to the energy and manufacturing sectors; Oracle’s acquisition of clinical trials management software provider, Phase Forward; Symantec’s acquisition of data encryption technology vendors, PGP Corp., and Vocus’ acquisition of DataPress, a provider of SaaS based public relations applications throughout Europe.
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ABB (SWX:ABBN) acquires Ventyx
Category: Energy Management Software
Purchase Price: $1,000,000,000 EV
Seller Revenue (TTM): $250,000,000
Revenue Multiple (TTM): 4.0x EV
Payment Terms: Cash
SEG’s Perspective:
Power and automation technology group, ABB, acquires Ventyx, a leading provider software to the energy and manufacturing sectors. Ventyx brings ABB complementary geographic coverage and an IT product suite highly complementary to ABB’s operational technology (OT) network management business – energy management systems, distributed management systems and outage management systems. The acquisition will enable ABB to bridge IT and OT departments in the energy management sector, which have begun to cooperate at an increasing rate following the rapid adoption of smart grid projects. Ventyx was formed through Vista Equity Partners’ acquisition of Indus International in 2006 ($212.8EV million, 1.7xEV TTM revenue), which was then merged with MDSI Mobile Data ($45.6EV million, 0.9xEV TTM revenue). Ventyx made four tuck-in acquisitions from 2007 – 2009.
Oracle (NASDAQ: ORCL) acquires Phase Forward (NASDAQ: PFWD)
Category: Clinical Trial Management Software
Purchase Price: $611,750,000 EV
Seller Revenue (TTM): $213,260,000
Seller EBITDA (TTM): $30,350,000
Revenue Multiple (TTM): 2.9x EV
EBITDA Multiple (TTM): 20.2x EV
Payment Terms: Cash
SEG’s Perspective:
Enterprise software behemoth, Oracle, acquires Phase Forward, the leading provider of clinical trials management software. Through its acquisition of Phase Forward, Oracle bolsters its position in the pharmaceutical space by picking up the largest pure-play provider of clinical trials management applications, and will complement Oracle’s pharma specific CRM and sales force automation On-demand applications set to release in the 1Q10. Oracle’s $17 per share tender offer represents a 29% premium over Phase Forward’s pre-announced average 30 days closing stock price. Phase Forward has built its product portfolio in part through inorganic means over the past two years, having acquired Maaquzi ($11 million), Covance ($9.7 million), Waban ($14 million, 3.5xTTM revenue), and Clarix ($40 million, 14.6xTTM revenue).
Symantec (NASDAQ: SYMC) acquires PGP Corporation
Category: Data Protection Software
Purchase Price: $300,000,000
Seller Revenue (TTM): $75,000,000
Revenue Multiple (TTM): 4.0x
Payment Terms: Cash
SEG’s Perspective:
Leading enterprise and consumer security vendor, Symantec, acquires PGP Corporation, a provider of data protection software. With the acquisition of PGP, Symantec will bolster its email and data encryption software solutions for enterprises, businesses, and governments, via PGP’s Encryption Platform. Simultaneously, Symantec announced the acquisition of Guardian Technologies, a provider of mobile data encryption solutions. These acquisitions allow Symantec to expand its addressable market opportunity in the encryption software space and more effectively compete against McAfee, CheckPoint and Sophos, which have each made acquisitions of encryption vendors.Experts estimate that the market for encryption products will grow at 14%per year from 2009 to 2013, reaching $1.7 billion in 2013. PGP and Guardian Technologies represent Symantec’s 9th and 10th acquisitions in the past year.
Vocus (NASDAQ: VOCS) acquires Datapresse
Category: Media Content and On-Demand Public Relations Software
Purchase Price: $10,800,000 EV
Seller Revenue (TTM): $4,500,000
Revenue Multiple (TTM): 2.4x EV
Payment Terms: Cash/Earn-out
SEG’s Perspective:
Vocus, a leading provider of on-demand software for public relations, acquires Datapresse, a France-based provider of SaaS media content and public relations solutions. Datapresse bolsters Vocus’ presence abroad by adding approximately 2,000 customers in Europe, and was followed by the announced acquisition of BDL Media, a provider of SaaS based public relations solutions in China. The activity demonstrates Vocus’s vision of expanding internationally, often more easily achieved through inorganic means. Vocus’ cash on hand increased by 52% from 2007 to 2009, leaving the company with well over $100 million of cash on hand and a strong position for inorganic growth. Prior to Vocus’ acquisitions of BDL Media and Datapresse April 2010, Vocus’ most recent acquisition was in August 2006.
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.
