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An insider’s view on tech M&A transactions and trends, Inorganic Growth covers the numbers as well as the story behind them. Brenon Daly is the primary writer, with insights from across 451 Research. Hundreds of more in-depth M&A analysis reports and data can be found in 451 Research's... More
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  • Itty-Bitty Bitcoin M&A

    By Ben Kolada, Scott Denne

    Although the values of cryptocurrencies have skyrocketed, at least in the eyes of the beholders, the values of vendors in this sector so far haven't followed suit. To date, we've recorded just a few acquisitions of cryptocurrency companies and assets, with nearly all having been done by tiny acquirers. The dealmaking so far suggests that the new-world currency medium has an odyssey in front of it before it becomes an established, liquid currency, and before its exchanges become worthy of big-ticket acquisitions.

    Ripple Labs, with backing from Andreessen Horowitz, Lightspeed Venture Partners and others, 'acq-hired' simplehoney as it builds out a payment protocol to transact in Bitcoin and other currencies. CoinMyne, a maker of Bitcoin-mining software, added to its software products by purchasing the CGWatcher and CGRemote products and hiring their creator, Justin Milone. And yesterday, EffTec International, a penny stock, grabbed BitBank. (We've also noticed that Bitcoin is finding its way into M&A in other ways - Lemon, a mobile wallet startup acquired by LifeLock for $43m, had $1.2m worth of Bitcoin on its balance sheet.)

    Acquisitions are likely to remain small for quite some time, given recent events. The ongoing implosion of Bitcoin exchange MtGox means that the road to high-profile liquidity for cryptocurrency vendors is going to take longer than initial hype suggested, if it materializes at all. However, if banks and retailers become comfortable with Bitcoin as either a currency or a secure medium for transacting, deals could swing upward, as we've seen with the rising volume of mobile payment acquisitions.

    For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

    Feb 26 5:14 PM | Link | Comment!
  • Citrix Takes A Breather From M&A

    By Ben Kolada

    After setting an M&A spending record in 2012, Citrix (NASDAQ:CTXS) has stayed on the sidelines. The company announced six acquisitions that year, including two of its three largest deals, and spent more than $750m, the most in its history. It has been pretty quiet since then, announcing only two acquisitions in 2013 for a combined total of just $11m.

    The cooldown contrasts the trend we're seeing among the other large tech vendors, most of which have moved toward fewer and larger acquisitions. (Our recent Tech M&A Outlook webinar talks more about this trend.) Citrix participated in this activity in 2012, when it announced its all-cash acquisitions of Bytemobile for $435m and Zenprise for $327m. What's especially noteworthy is that those two deals combined were worth more than the free cash flow Citrix generated in all of 2012 (though we note that the Zenprise buy closed in January 2013).

    However, poor financial results have derailed Citrix's dealmaking machine since then. In the 15 months since announcing the Zenprise purchase, Citrix's quarterly results have been rocky - it has lowered guidance or posted results below analysts' expectations a half-dozen times.

    Its recently released 10-K shows that Citrix paid $5.3m for Byte Squared in September and $5.5m for Skytide in December, its only two deals of 2013. At $28.2m, the lone purchase Citrix has announced so far this year, Framehawk, already surpasses its 2013 total M&A spending, but still falls below its three-year median acquisition size of $45m, according to The 451 M&A KnowledgeBase.

    Citrix's recent acquisitions

    Year announced*TargetTarget abstractDeal value
    2014FramehawkApplication mobilization software provider$28.2m
    2013SkytideCDN and streaming video analytics$5.5m
    2013Byte SquaredMobile file-editing software$5.3m
    2012ZenpriseMobile device management software$327m
    2012Beetil Service ManagementHelpdesk management SaaSNot disclosed
    2012BytemobileMobile traffic management software$435m
    2012Virtual ComputerDesktop virtualization software providerNot disclosed
    2012ApereSingle-sign-on security vendor$25.2m
    2012PodioTeam collaboration SaaS provider$45.3m

    Source: The 451 M&A KnowledgeBase *In 2012, Citrix also acquired two unnamed companies

    For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: CTXS
    Feb 26 4:44 AM | Link | 1 Comment
  • In Seeking New Channels, Facebook Mobilizes The Masses

    By Scott Denne

    Facebook (NASDAQ:FB) has a challenge in mobile that it didn't face with PCs: niche competition. When the company grew up in the PC era, it could fend off rivals through product design and virality. Its $19bn purchase of messaging app WhatsApp shows that mobile is a different game. It's not the first time Facebook has paid an obscene amount - at least by traditional M&A measures like revenue or EBITDA multiples - and it won't be the last time.

    Think of Facebook as a network (in the television sense). In the days of broadcast (PC), it was OK for networks to have a single channel, but the emergence of cable TV (mobile) brought a slew of niche players that eroded broadcasters' audiences. So networks added - and bought - other channels. The game was straightforward with the PC: whoever builds the most viral product wins. Mobile is more competitive, in part because of the low cost of launching an app, and because there's a smaller screen, there's more desire for straightforward, single-function apps.

    Scale is everything in advertising, and Facebook will pay what it needs to pay to own anything that threatens its audience in mobile, especially as mobile now makes up more than half of its ad revenue. Even though it won't be plastering ads on WhatsApp anytime soon, it keeps a massive audience intact. It's the same logic that led to its $1bn purchase of Instagram when the photo-sharing app threatened one of Facebook's core functions, and that same strategy is likely to lead to another eye-popping deal when a new category of mobile networking apps emerges.

    For more real-time information on tech M&A, follow us on Twitter @451TechMnA.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: FB, Mobile, Social, Tech
    Feb 20 4:45 PM | Link | 1 Comment
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