Thursday, October 09, 2014


So "funds advised by" Apax Partners, the PE giant who has danced in and out of the ERP graveyard for years (most recently failing to find a buyer for Epicor), will be acquiring Exact Holdings, the Dutch rollup which acquired several Tier 2 and Tier 3 ERPs back in the day.

Here's a detailed announcement from the company.

Haven't seen any discussion anywhere yet about potential combinations with Epicor, which would presumably hinge on the nature of the relationship between Apax and these acquisition funds.  The price tag for Exact is $925 million, a little less than Apax paid for Epicor in 2011 (they were looking for at least $3 billion to flip it this year).

Of course, the most likely scenario is just that the "funds advised by" Apax made Exact an offer that was too good to pass up.  The company announcement notes:
The Offer Price represents a premium of 27% to the closing price of 10 July 2014 and a premium of 40% to the average closing share price of the last 12 months prior to that date.
What it doesn't say is that the stock has been consistently down another 10% or so since July, so the premium is even higher than that.  Perhaps the "funds advised by" Apax are looking for a way to pay themselves some nice dividends, like Apax did for itself when it straddled Epicor with additional debt.

For what it's worth, the Bloomberg report on the deal dispenses with the "funds advised by" fig leaf, and just says Apax.  It also includes this beaut of a quote from a Dutch financial analyst:  "Software providers in general are very attractive for private equity, especially when the stocks are trailing due to macroeconomic developments."

In other words, if you've got to put your money somewhere in a crappy market, buy companies with captive customers.  (Here's where I make my regular pitch for open source ERP, which has the effect of giving those customers real choice and control over their software investment...)

Stay tuned.


  1. This does point to an important inflection point. The substitutes for traditional proprietary ERP - cloud, open source, and domain-specific solutions have become more credible.

    The empire is trying to strike through increasing customer lock-in through more application company acquisitions, more middleware acquisitions and by hardware bundling through engineered systems. The spate of recent private equity purchasing shows that the weaker players using traditional models are vulnerable.

    The Achilles heal, in my opinion, is that all of these acquisitions significantly reduce economies of scale as large vendors attempt to integrate functionality across applications and across the stack. And, much of it using legacy core technology.

    Middleware has been commoditized. Agile development organizations can leverage open source to handle all the transaction plumbing, use industry standards and build on the latest and most efficient development frameworks.

  2. It will take a very brave company to buy Epicor. If they do their due diligence they will see that there is little value there and virtually no growth. The best an acquirer could hope for would be to get rid of the incompetent mgt team, strip out some costs, and improve the cash flows. E10 will not save Epicor, it is at most a band aid. Sales have been weak since its release.

    1. Where is the 10K, it should have been filed by now?
      Never a good sign when these filings are delayed. Should we be expecting a restatement?

      Hopefully Apax will see the light and make some changes in the lame finance team.

  3. APAX flipped it