Dennis Byron

Red Hat's Latest Acquisition Brings Multiples Back to Earth

Cameron

Thanks for the comment. As Sacha describes above, the idea is to try to figure out what the acquired company did or will do the year after it was acquired. As the blog post notes, lining up the years will never be perfect.

We will never know on JBoss but Red Hat SEC filings indicate its revenue actually declined after it was acquired. As for Qumrannet, the 5X is simply based on the Red Hat press release of September 4, 2008 announcing the deal.

Bigger point: the trend line has gone from unbelievably high to a more normal multiple traditionally assoicated with any young hot software company.

-- Dennis