8 Feb 20150 Comments
The acquisition of MKS by PTC in 2011, caused me to reflect a bit on what good acquisitions might look like and what they might teach us about building (sometimes elusive) long term shareholder value. As a result, over the last 6 months, I’ve progressively assembled a collection on the most significant acquisitions in the Waterloo area. To my knowledge, such information has hitherto never been collected. We all love to speculate, but it is more productive to ground that speculation with facts.
The following table is intended to summarize value creation through the lens of several key benchmarks.
|Date Acquired||Date Founded||Company Age
|1||Pixstream||Cisco||369||December 21, 2000||1996||4||196||5.4||2||68.3||27 551||47.2||1.88|
|2||Dalsa||Teledyne Technologies||341||February 14, 2011||1980||31||1000||200||3||1.7||200 000||0.85||0.34|
|3||MKS||PTC – Parametric||304||May 31, 2011||May 1, 1984||27||360||75||4.1||208 333||0.96||0.84|
|4||Mitra Imaging||AGFA Healthcare||252||January 3, 2002||1990||12||400||50||4||5||125 000||3.38||0.63|
|5||Bluegill||Checkfree||250||April 28, 2000||1996||4||150||20||5||12.5||133 333||68.57||1.67|
|6||Unitron||Phonak||91||November 22, 2000||1965||35||300||62.6||6||1.5||208 667||0.67||0.30|
|7||SlipStream||RIM||91||June 1, 2006||2000||6||120||13||7||7||108 333||14.33||0.76|
|8||Tsavo Media||Cyberplex||75||June 10, 2010||2001?||9||120||110||8||0.7||916 667||6.83||0.63|
|9||WATCOM||Powersoft||74||February 11, 1994||1981||13||100||8||9||9.3||80 000||2.4||0.74|
|10||LivePage||Janna Systems||68||September 20, 1999||1990?||9||12||1||10||68||83 333||3.64||5.67|
|11||EMJ||Synnex Canada||64||July 14, 2004||1979||25||350||303||12||0.2||865 714||1.18||0.18|
|12||Dspfactory||AMI Semiconductor||51||September 9, 2004||1998||6||75||16||3.2||213 333||14.87||0.68|
|13||MapleSoft||Cybernet Systems||49.8||September 1, 2009||April 30, 1988||21||50||12||13||4.1||240 000||1.17||1.00|
|14||PrinterOn||Samsung||40||September 2, 2014||2000||14||50||10||4||200 000||2.15||0.80|
|15||SS Technologies||Woodhead Industries||35||July 31, 1998||1991||7||75||50||14||0.7||666 667||11.6||0.47|
|16||Reqwireless||32||2001||June 23, 1905||4||15||1||32||66 667||30||2.13|
|17||TribeHR||NetSuite||30||October 22, 2013||2009||4||24||4.5||18||6.7||187 500||45||1.25|
|18||GBG||HighJump Software||26||November 1, 2006||1991||15||200||22||11||1.2||110 000||2.09||0.13|
|19||PostRank||25||June 3, 2011||March 1, 2007||4||20||0||n/m||n/m||n/m||1.25|
|20||Kaparel (Pixstream)||Rittal||21||December 10, 2000||1996||4||30||7.1||17||3||236 667||50.62||0.7|
|21||VideoLocus||LSI Logic||20||November 14, 2002||May 1, 2001||2||17||0||n/m||n/m||n/m||1.18|
|22||RapidMind||Intel||19||August 19, 2009||2004||5||25||3||6.3||120 000||18||0.76|
|23||BufferBox||17.5||December 30, 2012||2011||2||10||0||n/m||n/m||n/m||1.75|
|24||Software Metrics||Equitrac||8||February 1, 2000||September 1, 1992||8||35||3||16||n/m||n/m||n/m||0.23|
|25||Volker Craig||NABU||5.9||1981||1973||8||45||5.9||1||131 827||6||0.47|
- Sources: public records, internet, personal recollections and interviews with 25 key ecosystem participants. In the interests of data utility, I welcome any revisions or comments regarding accuracy or completeness.
- All data are “normalized” into US Dollars, using an exchange rate current on the date of the acquisition. The use of US$ reflects the fact that most technology companies are really valued in US$ and hence that makes comparisons, both across the data and to other jurisdictions, more meaningful.
- The sample set is limited to my sense of what a technology company is – your mileage may vary.
- Acquisition PRICE includes cash, stock and post deal incentives, including earn outs.
- Several companies were re-acquired after the first acquisition (e.g. WatCom and LivePage). These follow on transactions are not reflected in this data.
- Some companies spun out several acquisitions, such as Kaparel which was sold out of Pixstream or SS Technologies, originally spun out of Sutherland Shultz.
- AGE represents the time in years from founding to the (first) acquisition.
- EMPLOYEES is the world wide count.
- SALES, given the high growth nature of many of these businesses, levels generally reflect the run rate at acquisition, rather than purely using an LTM (“Last Twelve Months”) measure.
The above data suggests a lot of trends and insights. It contains a wealth of insights, and also the individual narratives of each of these companies is, in itself, worthy of more discussion and analysis. In aggregate, however, the data suggest some key ideas to me:
- Acquisition prices are a great proxy for long term shareholder value, precisely because leading global technology companies provide an informed, third party valuation that likely has way more science than most earlier stage technology company valuation.
- Building larger companies takes time. The myth of the “quick flip” startup is (mostly) just that.
- As I discuss in my next post, building major technology companies is hard. We don’t (yet) seem to have “cracked the code” on this and need to learn how to build more over time.
- The aggregate scale of these companies, at the time of their acquisition, is materially significant to our region – almost 4 000 employees and almost $1 billion in revenue.
- Companies take much longer to build than most would expect. While the range in ages from 2 to 35 years is quite diverse, the average age of 11.2 years shows the time, resources and hard work to build real businesses.
- Acquisitions are good for our economy. Many people consider acquisitions to be a bad thing, but for those companies that were already at reasonable scale, most have continued to grow post acquisition. In addition to the wealth generated and its spinoffs, the acquirors bring new ideas and often jobs to our region. This is yet another reason why building larger technology companies is so important.
I am hoping that this data collection regarding acquisitions, and my initial take on conclusions, might stimulate further discussion around the notion of building significant value in businesses.
Please feel free to comment, or even contact me, with insights, questions and corrections.