LTG Offers to Acquire NetDimensions for $67 Million

Learning Technologies Group (LTG), a provider of specialist learning management solutions, offers to acquire NetDimensions, a provider of learning and performance management solutions predominantly to highly regulated industries. The proposed transaction follows LTG’s long-term strategy of acquiring specialist LMS providers and further expands its reach into the healthcare, life sciences, manufacturing, financial services, energy, transportation and government markets.

Brief Transaction Details:

Enterprise Value (mm) $55.8
TTM Seller Revenue (mm) $25.3
TTM Seller EBITDA (mm) $0.3
Revenue Multiple 2.2x
TTM EBITDA Multiple 166.5x
Seller Business Description

NetDimensions (Holdings) Limited, an investment holding company, provides performance, knowledge, and learning management solutions worldwide.

Buyer Business Description

Learning Technologies Group plc provides various e-learning services and technologies to corporate and government clients worldwide.

For more information, see the Press Release.

Cisco Acquires AppDynamics for $3.9 Billion

Cisco acquired “unicorn” AppDynamics just prior to their IPO on Tuesday, January 24th. AppDynamics’ best-of-breed cloud application intelligence platform complements Cisco’s network performance management suite to provide customers with enhanced visibility and optimization of their entire IT infrastructure stack.

Cisco’s offer ($3.9 billion Enterprise Value, 18.9x TTM revenue) is nearly 130% higher than AppDynamics’ projected $1.7 billion IPO valuation and nearly 400% higher than the median 5.0x TTM revenue multiple for all publicly traded SaaS companies in 4Q16.

Brief Transaction Details:

Enterprise Value (mm) $3,902.9
TTM Seller Revenue (mm) $206.2
TTM Seller EBITDA (mm) -$105.3
TTM Revenue Multiple 18.9x
TTM EBITDA Multiple
Seller Business Description

AppDynamics, Inc. provides an integrated suite of software application and IT infrastructure monitoring and analytics products.

Buyer Business Description

Cisco is a leading provider of IT infrastructure software and hardware.

For more information, visit CiscoTechCrunch or Bloomberg.

SEG Publishes Its April 2012 Monthly Flash Report

Our complimentary April 2012 Flash Report assesses the financial and market performance of more than 250 publicly traded software, SaaS, and Internet companies, sorted by product category. The Report also highlights a selection of the most recent software M&A transactions.

Download the report by visiting: http://www.softwareequity.com/research_flash_reports.aspx

SEG Publishes Its March 2012 Monthly Flash Report

Our complimentary March 2012 Flash Report assesses the financial and market performance of more than 250 publicly traded software, SaaS, and Internet companies, sorted by product category. The Report also highlights a selection of the most recent software M&A transactions.

Download the report by visiting: http://www.softwareequity.com/research_flash_reports.aspx

Oracle acquires Taleo

Transaction Details
Date: Announced on 2/9/2012
Enterprise Value:  $1.8 billion
Seller Revenue (TTM):  $309 million
Revenue Multiple (TTM):  6.0x
Premium:  The purchase price is 18% and 24% above Taleo’s one day and month prior valuation
Payment Terms:  100% cash

Oracle Business Description

Oracle Corporation is an enterprise software company that develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide.  The company was founded in 1977 and is headquartered in Redwood City, California.

Taleo Business Description

Taleo Corporation provides SaaS based talent management software solutions. The company’s products provide medium and large enterprises with a wide range of talent management solutions including sourcing, recruiting, and onboarding to performance management, goals management, development planning, succession planning, compensation, and learning.  Taleo Corporation was incorporated in 1999 and is headquartered in Dublin, California.

SEG’s Perspective

Oracle’s acquisition of Taleo marks its second, billion dollar acquisition of a SaaS provider in the last four months.  In November, the Company acquired RightNow for $1.5 billion, a TTM revenue exit multiple of 7.0x.  Oracle’s acquisition of Taleo falls on the heels of Taleo’s acquisition of Cytiva Software, a Software Equity Group client.  In December 2011, SAP acquired SuccessFactors, another provider of talent management software, for $3.5 billion.  The Taleo and SuccessFactors acquisitions are evidence the HR management (HRM) market, a superset of talent management, has become sizable enough to regain the attention of the large ERP providers who are quickly losing sales to emerging SaaS providers.  According to Forrester, the HRM market reached $4.8 billion in 2011 and is expected to grow to $6.1 billion in 2014, representing an 8% CAGR over that time period.  Talent management is growing even quicker.  Over the same time period, this sub-segment of HRM is expected to grow at a 17.0% CAGR.  Taleo, a leading provider in talent management, is growing much quicker, closing fiscal 2011 with TTM revenue growth of 30.2%.  Yet, given Oracle’s $36 billion of revenue in 2011, Taleo’s growth and revenue contribution hardly registers on Oracle’s P&L.  Make no mistake, the acquisition of Taleo is about extending Oracle’s legacy HR product suite with talent management capabilities, acquiring a proven SaaS platform to potentially leverage for other product lines, and ensuring Oracle remains competitive with SAP.

SaaS M&A Market Overview

The SaaS M&A market is hot.  In 2011, there were 200 SaaS M&A transactions, up 91% from 2010’s 105 M&A transactions.  Valuations are ramping as well.  The median EV/Revenue exit multiple climbed to 3.7x in 2011, up from 3.2x in 2010.  Among the early adopters of SaaS, the talent management space is one of the most active SaaS M&A product categories, accounting for 10% of all SaaS transactions in 2011.

Our 2012 Annual M&A Buyer Survey, a comprehensive survey of 200 corporate development heads of the largest software buyers in the world, confirmed that SaaS M&A will continue to be highly active in 2012.  Of our respondents, 46% stated that it was “very important” or “essential” their acquisition targets be “all or substantially SaaS/subscription based”.  By contrast, only 13% of buyers indicated SaaS was “very important” or “essential” in 2010.

SEG’s HR Management Experience (SaaS and Software)

Software Equity Group has consummated 10 HR Management SaaS and software acquisitions in recent years. Specific expertise includes selling companies providing applications for employee recruitment management and onboarding, employee performance management, employee training & learning management, employee time and attendance, employee benefits administration, employee expense management, & employee shift scheduling.  Buyers of these clients have included Taleo, Kronos, Kaplan, Administaff, Wolters Kluwer, & EBIX…to name a few.  To learn more, please contact Kris Beible at kbeible@softwareequity.com.

Software Equity Group’s Client, Cytiva Software, Acquired by Taleo

SAN DIEGO, CA – April 4, 2011.  Software Equity Group, LLC (SEG) announced today that Taleo Corporation (NASDAQ: TLEO), the leading provider of on-demand talent management solutions, completed the acquisition of SEG’s client, Cytiva Software Inc. (TSX-V: CRX), a leading midmarket provider of on-demand recruiting software solutions.

This acquisition solidifies Taleo’s leadership position in talent management for small and medium-sized businesses, and will extend Taleo’s customer base for its unified talent management platform.

“We are excited about the opportunity to continue providing Cytiva’s customers with a high level of service and support while bringing them the advantages of Taleo’s full suite of recruiting, performance, succession, compensation and learning capabilities,” said Michael Gregoire, Chairman and CEO of Taleo in a separate press release by the company.

About Taleo
Taleo’s (NASDAQ: TLEO) cloud-based talent management platform unites products and an ecosystem to drive business performance through talent intelligence. Nearly 20 million people, worldwide, use Taleo for talent acquisition, performance and compensation management, including 48 of the Fortune 100.

About Cytiva Software
Cytiva Software Inc. (TSX-V: CRX) provides innovative on-demand talent management software and services to mid-sized and Fortune 500 companies. Its flagship recruiting software product, SonicRecruit, allows corporations to screen applicants, automate recruiting departments, customize corporate career sites and hire great people.

About Software Equity Group
Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors.  Founded in 1992, our 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 Israel.  We have represented public companies listed on the NASDAQ, NYSE, American, Toronto, London and Euronext exchanges. Software Equity Group also advises several of the world’s leading private equity firms. We are 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