SaaS M&A Activity Heats Up
The first week of 2010 was marked with three quick mergers and acquisitions in the Software-as-a-Service (SaaS) market.
They each were in different sectors of the industry and involved differing types of transactions, but still clearly illustrated that there are a variety of companies seeking to capitalize on the escalating demand for SaaS solutions and position themselves as strategic sources of these on-demand services.
The first was an acquisition by EMC of Archer Technologies, a privately-held governance, risk and compliance (GRC) software vendor who offers both on-premise and SaaS solutions. Archer claims to have more than six million licensed users, including 25 of the Fortune 100.
EMC plans to combine Archer’s information risk management capabilities with the information security solutions provided by EMC’s RSA Security Division to enable customers to automate and gain visibility and policy enforcement capabilities across both physical and virtualized IT environments.
The second transaction was the $100 million acquisition of Peopleclick–a provider of SaaS-based Talent Acquisition and Workforce Compliance and Diversity solutions–by private equity firm, Bedford Funding who plans to merge Peopleclick with Authoria, an existing portfolio company of Talent Management solutions.
Bedford hopes the combination of these companies, operating under the new name of Peopleclick-Authoria, will create a leading provider of Talent Management software, services and consulting solutions for enterprises worldwide.
These two transactions are in keeping with my previous prediction that we would see a consolidation in the SaaS market as various companies attempt to pull together end-to-end portfolios that can better position themselves as strategic sources in the eyes of IT and business decision-makers within customer organizations.
The EMC acquisition of Archer is the latest in a year-long buying spree that has spread the vendor’s reach well beyond its core storage solution capabilities. In particular, EMC has been making a concerted effort to strengthen its position in the security, automation and management areas.
The merger of Peopleclick and Authoria is a typical private equity roll-up maneuver aimed at trying to generate greater business value by pulling together a series of under-performing assets. While this type of strategy is textbook material for PE firms, it will take a lot more ‘special sauce’ to make it successful from a competitive point of view.
Meanwhile, Salesforce.com made an unannounced acquisition of GroupSwim, a provider of on-demand social software for businesses. GroupSwim was developing a Web 2.0-based user interface that captures collaborative work in multiple formats using semantic technology. The company’s software automatically tags, rates and searches content (discussions, emails, documents, wikis), and identifies topical experts.
The GroupSwim acquisition fits well with Salesforce.com’s recent initiative, Chatter, aimed at providing enterprise-class social networking to businesses. It also is in keeping with the company’s past practice of acquiring companies while they are young, relatively inexpensive and can easily be merged into Salesforce.com’s ongoing operations and corporate culture.
This flurry of activity may be a barometer of a busy year of M&A transactions to come.