Event Summary
Amid
extensively reported controversial takeover bids & counter bids, lawsuits &
counter lawsuits tug-of -wars amongst the three renowned Tier 1 application
vendors, Oracle, PeopleSoft and J.D. Edwards (see Frantic
Merger-Mania Spiced Up With Vendettas Leaves Customers Anxious), almost
unnoticed or only briefly reported by market observers have been recent moves
of some much smaller and less visible enterprise software providers globally
(albeit not necessarily within their sweet spots) in their bids for securing
their future.
This
note deals with two other notable acquisitions:
-
Agilisys International's acquisition of Future Three
Software, Inc.
-
Made2Manage Systems Inc. (NASDAQ: MTMS) agreement to be acquired
by an affiliate of Battery Ventures VI, L.P. Battery Ventures
This
is Part One of a three-part note.
Part
Two will discuss the Agilisys Market Impact.
Part
Three will cover the Made2Manage Market Impact and make User Recommendations.
Agilisys International
Most
recently, on June 10, Agilisys International, a provider of enterprise resource
planning (ERP) and supply chain management (SCM) solutions for the automotive
industry and for certain process industries, which was formed in 2002 as a privately-held
spin-off of former process manufacturing & distribution division of SCT
Corporation (NASDAQ: SCTC) (for more information, see Agilisys
Continues Agilely Post-SCT), announced the acquisition of Future Three Software,
Inc. (www.future3.com), a privately-held SCM provider for mid-tier automotive
suppliers. The acquisition, which is the second for Agilisys post-SCT and within
the same market segment (see How
Much Wisdom Will BRAIN Bring To Agilisys?), was again financed through funds
managed by Golden Gate Capital and Parallax Capital
Partners in conjunction with Future Three's investor Summit
Partners.
The
Future Three acquisition too seems consistent with Agilisys' stated growth strategy
of acquiring niche vendors with deep vertical expertise and long-term direction.
To that end, this acquisition should expand Agilisys Automotive's
(a future name for Agilisys' division comprising former BRAIN AG
and BRAIN North America and soon to include Future Three) market
share in North America and allow the vendor to further concentrate on its customers'
distinctive automotive requirements. The merging of the two automotive industry
prominent mid-market providers should create a comprehensive suite of global
solutions that should meet the stringent requirements of the automotive industry,
and also support a variety of technology platforms and ERP systems to provide
needed flexibility and scalability. Headquartered in Northville, MI, Future
Three has mustered a notable customer base and a long history of delivering
SCM solutions for mid-tier automotive suppliers, and the addition of its approximately
400 automotive installations to the Agilisys Automotive customer base should
enlarge Agilisys' footprint in the industry, bringing its total number of automotive
installations to over 2,400 worldwide.
Following
up on the heels of the above acquisition, on June 25, Agilisys Automotive also
announced improvements to its Automotive Message Exchange Server Solution with
AutoEx 4.0. Formerly called BRAIN-eX, the
product espouses a new name, as well as improved functionality in the areas
of: simplified routing, testing configurations, extensive on-line documentation,
improved query capabilities, comprehensive e-mail information and capabilities,
scheduling improvements, network specific additions and updates along with infrastructure
enhancements.
Therefore,
backed by committed private investors and by maintaining and fulfilling focused
acquisitive aspirations, Agilisys seems to somewhat look like a smaller counterpart
of SSA GT. Namely, like its acquisitions-famished larger privately
held competitor, and also because of the large financial backing of its investors,
Agilisys believes it can grow faster and without the typical legal intricacies
associated with its publicly traded competitors. The going private' recipe
seems to be bearing fruit during these difficult economic times and withered
investors' enthusiasm.
As
an aside, from hindsight, Deltek Systems incidentally seems
to have been quite visionary to de-list from NASDAQ even a way back at the beginning
of 2002. Given its good performance due to sharp focus on project-based industries,
government contactors and professional services, solid financial situation at
the time (and nowadays too, with over $100 million in revenues), and the fact
that its founders (i.e., the father and son deLaski) still co-own the majority
share of the company, it did not even need an investment backing.
Made2Manage Systems
Incidentally,
another seemingly honorable exit strategy from the public eye happened on June
5, when Made2Manage Systems Inc., a provider of broad enterprise business systems
for small and mid-market manufacturers, announced a definitive agreement to
be acquired by an affiliate of Battery Ventures VI, L.P. Battery Ventures,
one of the leading venture capital firm focused on technology investments, which
manages nearly $2 billion in committed capital and has a 20-year history in
successfully making investments in software companies. The acquisition of Made2Manage
Systems by Battery Ventures should allow the vendor to better serve the business
needs of its well-established customer base, as well as to continue new product
development initiatives, optimize sales and marketing efforts, and evaluate
complementary acquisition candidates to enhance its position in the space.
Under the terms of the agreement, an affiliate of Battery Ventures will acquire Made2Manage Systems for cash consideration of approximately $30 million or $5.70 per outstanding common share of Made2Manage Systems stock. Consummation of the transaction is dependent upon approval from the company's shareholders and is expected to close in the third quarter of Made2Manage Systems' fiscal year 2003. The transaction price is at significant premium over the market price at the time of the announcement (i.e., 36% compared to the ~$4.20 value) and reportedly affords liquidity for all shareholders. The company will continue to operate as Made2Manage Systems Inc., with employees and operations remaining headquartered in Indianapolis, IN.
Public
since 1997 and with 2002 revenues of ~$30 million, Made2Manage Systems is focused
on meeting the needs of small and midsize manufacturers and distributors throughout
the US, Canada and the UK. The company's management team supports the acquisition
of Made2Manage Systems as the most effective way to enhance its position as
a notable player in the small and midsize enterprise software market. The privatization
of the company will supposedly enable senior management to increase their focus
on meeting customer needs and demands — including even more responsive customer
service and support, and the ongoing development of the Made2Manage
Enterprise Business System — without the close scrutiny of skeptical
analysts and fastidious shareholders and without fear of any unwanted acquisition.
Upon completion of the acquisition, Made2Manage Systems will be a wholly owned
subsidiary of Battery Ventures' affiliate, BV Holding Company, Inc.
This
concludes Part One of a three-part note.
Part
Two will discuss the Agilisys Market Impact.
Part
Three will cover the Made2Manage Market Impact and make User Recommendations.