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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 [email protected] with your contact information.

Archives > Transaction Case Study 77

SOKOLOFF & COMPANY CASE STUDY:
Vista Equity Acquires Tibco

DATE ANNOUNCED: September 29, 2014
BUYER: Vista Equity  
SELLER: Tibco (Nasdaq: TIBX)    
PURCHASE PRICE: $4.3 Billion
FORM OF PURCHASE PRICE: Cash - $24 per share

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES

Year 2012 2013 Trailing Twelve Months
through
August 31, 2014

Revenue

$1.03B

$1.07B

$1.08B

EBITDA

$240.55M

$216.97M

$233.49M

Cash

 

 

$532.45M

Debt

 

 

$552.27M

Purchase Price

 

 

$4.3B

Enterprise Value

 

 

$4.3B

Multiple of Revenue

 

 

4.00

Multiple of EBITDA

 

 

18.50

TRANSACTION DRIVERS:
Vivek Ranadivé, Chairman and CEO of TIBCO said "We strongly believe this transaction best positions the Company to execute on our vision… additionally, as a private company, TIBCO will have added flexibility to serve our customers and execute on our long-term strategy…"

Further, David West, a member of TIBCO's board and Special Committee said "… TIBCO engaged in an extensive process involving a large and diverse group of strategic and financial buyers.  Ultimately, the Board concluded that the sale alternative was the best alternative, and that Vista's offer to acquire TIBCO is the best way to maximize value for our shareholders."

SOKOLOFF COMMENTARY:
While this likely will be a hit for Vista, it looks more like a single than a homerun.  TIBCO is a slow growth firm surrounded by behemoth competitors in the Business Intelligence space.  That said, its software is very “sticky,” tightly integrated within its clients networks and not easily displaced by competitive offerings.  Thus revenue is not likely to erode; maintaining TIBCO’s slow growth path is a low risk proposition. 

As we have said in other case studies, a maturing software business will generate 40%+ EBITDA margins. The upside ROI for Vista will likely come from heavy reductions in G&A expense, gradually increasing recurring revenues and amortization of the debt required to make the acquisition.

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