Wednesday, July 26, 2017

Sage buys cloud customers, more losses; will its balance sheet stay Intacct?

So some eyebrows arched upward yesterday when UK-based Sage, one of the more conservative ERP rollup shops out there, dug deep to pay $850 million for cloud-accounting vendor Intacct.

That works out to almost 10x revenues.  I can't give it to you as an earnings multiple, because like most of its peers in Software-Magic-As-A-Cloud (SMAAC), Intacct doesn't have any earnings.  Not sure it ever has - if anyone knows otherwise, please let me know either via email or in the comments below.

According to the press release, they had losses of $23 million on revenues of $67 million in fiscal 2016 (June).  Those revenues bumped to $88 million for 2017, but they must have spent like crazy to get them, because they didn't release the loss number.

Clearly Sage, with its stable of legacy products, some of which have received more facial reconstruction than others, was feeling a bit like the dowdy spinster at the ball.  But dang!  A good result for Intacct's patient investors, I guess, who have poured at least $130 million into it over the years.

Now it'll be up to Sage to see if they can make any, you know, profit.  I know, I know, that's so old-fashioned.  Maybe I just need a SMAAC upside the head.

Wednesday, March 29, 2017

You gotta admit, InforPlex would be a pretty cool name

So it appears that Plex Systems is looking to be sold for a third time, as all the phones at Francisco Partners (the PE shop that bought them from fellow travelers Apax Partners) all started vibrating with that five-year, time-to-sell reminder message.

Reuters reports that Plex, with revenues of just $100 million, hopes to be valued at "more than $1 billion, including debt."  Wow.

It's quite a coincidence.  That's the same figure I had in mind for potential acquirers of this blog.  And unlike nearly all of its subjects, The ERP Graveyard has no debt.  Please send offers in confidence to ned@xtuple.com.

Monday, September 12, 2016

What would Tony Stark do?

Random thought that occurred to me today, amid the shareholder grumbling about Oracle's proposed takeover of Netsuite ...

T. Rowe Price, who is the second largest shareholder in Netsuite behind - ahem - Larry Ellison, says it's not so much the fact that Ellison is reaching into one pocket to pay himself in the other... it's just the price that Oracle is offering.  Maybe.

But your humble blogger can't help but think of the similar drama swirling around Elon Musk's proposal to have Tesla (which he controls) merge with Solar City (ditto).

Both Musk and Ellison had cameos in the movie Iron Man 2.  For those sad people who don't follow the Marvel comics universe, Tony Stark is a self-described "genius, billionaire, playboy, philanthropist" who becomes the superhero Iron Man.  Musk and Ellison have both been compared to Stark over the years, and have laid varying claims to those four descriptions in their public and personal lives.

The fictional Tony Stark took over, and grew, the defense contractor started by his father in World War Two - and designed, built and manufactured all kinds of cool stuff, including of course the Iron Man suits.  Now, I've read a lot of comics over the years, but I don't recall ever seeing a story about Stark International using other people's money to fund deals like these two.  So, the question must be asked: What would Tony do?


Thursday, July 28, 2016

Oracle-Netsuite is actually happening

Wow, we didn't really believe it, but the WSJ is reporting this morning that Oracle is actually buying Netsuite for $9.3 billion, which is a premium of 19% over yesterday's closing price.

Business articles in the Journal don't usually get a lot of comments (unlike the political ones!) ... but almost as soon as the story was posted, a commenter wrote:

As a long-time JD Edwards/Oracle customer, I was so happy with our decision to migrate to NetSuite for a couple of reasons, not the least of which was not having to be an Oracle customer anymore. I guess I'll have to get used to being treated like garbage again by my ERP vendor.

Yep.  Or, you could try the leading commercial open source ERP, and never have to worry about that kind of thing again!

Thursday, June 30, 2016

Epicor back on the block, heavily laden

The WSJ is reporting that Apax Partners has come down with a case of the 5-year-itch, and is going to try again to find a buyer for Epicor.  Longtime Graveyard readers may recall their last attempt resulted in a bout of inspired Poetry from your humble blogger.

It focused on the shocking financial shell games going on in the firm, a theme which returned the following year when their borrowing practices raised eyebrows even at the ratings agencies who saw nothing wrong with the credit default swaps that led to the 2008 meltdown.

Interestingly, the WSJ piece says in 2014, they turned down offers "deemed too low from bidders including CVC Capital Partners ... Some bids were around $3 billion including debt."

Those last two words are pretty darn important.  How much debt would a buyer have to assume, to take this thing off of Apax's troubled-assets sheet?  The Bloomberg story a year ago said they were looking to borrow an additional $2 billion.  What's that money going toward, you might ask.  New product development?  Building out support teams and taking care of their customers?  Err... well, we do know they've paid themselves over $1 billion in dividends since 2012.

They were still losing money when they stopped reporting financials in 2014. Who knows what the income statement looks like today?  But I think we can all be forgiven for expecting a pretty lopsided balance sheet.

So, who wants to buy that?

UPDATE:  Turns out the answer is KKR.  See the comments.