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Transaction
Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail bwalko@sokoloffco.com with your contact information.

Archives > Transaction Case Study 59

SOKOLOFF & COMPANY CASE STUDY
Blue Coat Systems, Inc. to be acquired by Thoma Bravo

DATE ANNOUNCED: December 9, 2011
BUYER:   Thoma Bravo
SELLER:    Blue Coat Systems, Inc. (NASDAQ: BCSI)
PURCHASE PRICE: $1.3 Billion
FORM OF PURCHASE PRICE:  Cash ($25.81 per share)

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES


Year
FY 2010 (4/30) FY 2011 (4/30) Trailing Twelve Months
Year Ending
October 31, 2011

Revenue

496.14M

487.11M

467.18M

EBITDA

67.39M

93.18M

69.21M

Cash

 

 

361.39M

Debt

 

 

78.58M

Purchase Price

 

 

1.3B

Enterprise Value

 

 

1.02B

Multiple of Revenue

 

 

2.18

Multiple of EBITDA

 

 

14.70

TRANSACTION DRIVERS
President and CEO of Blue Coat, Gregory S. Clark stated that “the partnership with Thoma Bravo will assist Blue Coat in aggressively realizing the opportunities in its markets by providing a platform that enables greater focus on the business that supports the future growth of the company.”   With Thoma Bravo financing behind BCSI, they will have the opportunity to “innovate at an accelerated rate” and achieve a higher level of growth.”
Thoma Bravo has focused its last few investment efforts in the security technology industry and this is their fifth acquisition in the area.    Blue Coat is an award-winning global leader in this field.

SOKOLOFF COMMENTARY:
Despite managements’ proclamation of higher growth, this seems like a classic Mitt Romney style Private Equity play.  Take a public company private and change the focus from top line growth to improving earnings.  When successful this strategy often leads to improved top line growth as well.  The remaining producing employees are freed from both public company regulatory compliance/expense and from baby sitting non-productive employees.

Over the next 3-5 years, we predict that management and Thoma Bravo will double EBITDA margins from the current 15% and should catch a higher multiple tide for cyber security as BCSI exits back into the public market or is sold to a larger company.

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