Selected M&A Deals for the Week of May 05, 2014 to May 11, 2014

The table below includes a select list of Software, SaaS, Internet and Mobile M&A transactions for the week of May 5, 2014 to May 11, 2014. For a comprehensive analysis of software industry mergers and acquisitions and public software company financial performance you can download our research reports by visiting http://www.softwareequity.com/research_reports.aspx.

Notable transactions for the week include:

  • Lexmark’s acquisition of ReadSoft  [for an EV of $175.0mm]
  • Pegasystems’ acquisition of MeshLabs
  • Google’s acquisitions of Adometry, Inc.  and Appetas
  • Citrix’s acquisition of ScaleXtreme
  • Intuit’s acquisition of Lettuce, Inc.

M&A Activity; SEG; Software Equity Group

 

Software Equity Group’s Client, Dean Evans & Associates, Receives Growth Equity Investment From JMI Equity

DEA, Dean Evans and Associates, EMS, JMI, JMI Equity

SAN DIEGO, CA –April 15, 2014. Software Equity Group, LLC (SEG) announced today its client, Dean Evans & Associates, Inc. (dba Event Management Systems) the leading provider of facility scheduling and event management software, has received a strategic growth equity investment from JMI Equity, a leading growth equity firm focused on investing in leading software and technology-enabled services companies.

Founded in 1986 and headquartered in Centennial Colorado, Dean Evans & Associates (DEA) provides a full suite of meeting and event scheduling, resource management, academic scheduling, shared workspace management (office “hoteling”), web calendaring and online registration/survey solutions.  More than 4,000 organizations in over 75 countries rely on DEA’s Event Management System (EMS) software, including many Fortune 100 companies and other leading corporations, higher education institutions, law firms, conference centers, religious organizations, hospitals, cultural venues and sports facilities.

“For over 25 years, our team has been focused on providing our customers with the best in facility management software, along with the highest levels of customer service,” said Dean Evans, CEO and founder of DEA.  ”EMS is a premier brand with a strong competitive advantage, offering the most comprehensive package of services on the market.  With JMI’s expertise in growing enterprise software companies, along with its experience in higher education, we feel better than ever about our ability to continue to innovate and grow our offering.”

“We share the DEA team’s vision for the future and look forward to supporting the company in achieving its growth objectives,” said Brian Hersman, General Partner at JMI Equity.  ”DEA’s opportunity fits well with JMI’s strategy of bringing expertise and resources to build on a foundation of strong market and product leadership.”

About Software Equity Group

Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. Founded in 1992, the firm has guided and advised companies on five continents, including privately-held software and technology companies in the United States, Canada, Europe, Asia Pacific, Africa and the Middle East. SEG has represented public companies listed on the NASDAQ, NYSE, American, Toronto, London and Euronext exchanges, and also advises several of the world’s leading private equity firms. Software Equity Group has been ranked among the top ten investment banks worldwide for application software mergers and acquisitions.

For More Information:

Allen Cinzori, (858) 509-2800

acinzori@softwareequity.com

1Q13 Mobile M&A Snapshot

Mobile software M&A is heating up, accounting for over 15% of total software M&A in 1Q13.   Download the attached report to see trends in deal volume, exit multiples, most active buyers, and deal structures.  We also include all mobile software M&A transactions in 1Q13 as well as our view of the key players in the current mobile landscape.

Mobile Overview - Brief_Page_03

salesforce.com Acquires ExactTarget

salesforce.com, inc (NYSE:CRM) signed a definitive agreement to acquire ExactTarget, Inc. (NYSE:ET) from a group of shareholders for $2.5 billion in cash on June 3, 2013. The group of shareholders includes Battery Ventures, Collina Ventures LLC, Greenspring Associates, Inc., Insight Venture Partners, SAP Ventures, Scale Venture Partners and others. Salesforce will pay $33.75 for each outstanding share of ExactTarget.   SEG did not act as the advisor in this transaction.  For details on the transaction, download the pdf.

 

salesorce.com, ExactTarget, software M&A, SaaS M&A, CRM, Marketing

 

Software M&A Valuation by Size

…a rapidly growing smaller company will often deem an exit premature and spurn advances by a strategic acquirer, prompting the larger suitor to raise the bid.

This excerpt is from our complimentary Q3 2012 Software Industry Financial Report which can be downloaded here:  http://www.softwareequity.com/research_reports.aspx
Another key driver of exit multiples is size – of both buyer and seller.  As testament, buyers with TTM revenue greater than $200 million paid a median EV/Revenue multiple of 2.8x in 3Q12, while buyers with TTM revenue less than $200 million paid only 1.6x TTM revenue (Figure 31). Equally noteworthy: Sellers with less than $20 million TTM revenue received a median EV/Revenue multiple in Q3 of 3.9x from buyers with $200 million of revenue or more, while sellers with greater than $20 million TTM revenue were paid a median exit valuation of 2.7x.

Why? A rapidly growing smaller company will often deem an exit premature and spurn advances by a strategic acquirer, prompting the larger suitor to raise the bid. Case in point: GoInstant, a small but highly respected provider of enterprise social web browsing and collaboration solutions which allow customers, business partners, and colleagues to easily meet in online sessions, browse the web, and interact in real-time, as if seated side-by-side and was gobbled up for an estimated 15.0x TTM revenue by Salesforce.com.

Software M&A Valuations

…one-third of all software/SaaS M&A transactions with ascertainable exit multiples had an EV/Revenue multiple of 3.0x or greater.

This excerpt is from our complimentary Q3 2012 Software Industry Financial Report which can be downloaded here:  http://www.softwareequity.com/research_reports.aspx

The software industry’s median exit multiple was 2.3x TTM revenue in 3Q12, up sharply from 1.7x in 2Q12 (Figure 28).  The 2.3x benchmark is the highest since 2Q11’s  2.5x median exit multiple.  It’s worth noting that in Q3, one-third of all software/SaaS M&A transactions with ascertainable exit multiples had an EV/Revenue multiple of 3.0x or greater (Figure 29), and 8.0% of these deals boasted exit valuations of  5.0x TTM revenue or greater.

Among Q3’s transactions with the highest exit multiples were Salesforce.com’s acquisition of GoInstant ($70 million EV, 15.0x TTM revenue estimate); KEYW Holding Corporation’s acquisition of Sensage ($84.8, 7.0x); and SeaEnergy’s acquisition of Return to Scene ($16 million, 5.1x).

The largest SaaS deal of the quarter was IBM’s acquisition of Kenexa, a leading provider of talent management solutions ($1.3B EV, 4.1x TTM Revenue).  The deal follows on the heels of acquisitions by SAP and Oracle of Kenexa rivals SuccessFactors and Taleo.

Since very few software transactions publicly disclose a private software seller’s TTM EBITDA, we lacked sufficient data to ascertain the median EBITDA exit multiple paid in 3Q12 for private software company sellers (Figure 28).  We did, however, determine 3Q12’s median exit multiple for public software company sellers was 11.2x TTM EBITDA, a modest decline from 2Q12’s 12.1x TTM EBITDA exit multiple.