By Brenon Daly
Although IntraLinks (IL) is well-known for its "virtual deal rooms," the company itself hasn't spent much time in them. That changed on Thursday. After being out of the market for more than a decade, IntraLinks announced a double-barreled deal, picking up two online deal-sourcing platforms: MergerID and PE-Nexus. (And, yes, the company did use its own deal room to run the process.)
The addition of the two sourcing platforms makes sense as a way to increase the number of transactions that get executed in IntraLinks' core deal room. In fact, the company had added sourcing and networking features around the end of 2011, but had only attracted a few hundred users. MergerID and PE-Nexus dramatically increase the number of potential participants, with the two firms having attracted, collectively, some 5,000 firms -- representing about 7,200 total users.
Furthermore, the two platforms serve very different markets. MergerID -- divested by the FT Group's Mergermarket division -- focuses on midmarket deals, primarily in Europe and Asia. Meanwhile, PE-Nexus (as its name implies) largely targets U.S. private equity shops from its Florida headquarters. IntraLinks has indicated that it will pick up 11 employees from the two firms, and we understand that very little revenue will be added from the two subscription-based services.
More broadly, IntraLinks' move fits with the strategy and recent performance of its business. The M&A unit, which represented 42% of total revenue in 2012, was the only one of the company's three divisions to post growth last year. The 9% increase in its M&A-related revenue in 2012 helped bump up the overall top line at IntraLinks during what was -- by design -- a year of stabilization and investment.