Deal Focus: Citrix Acquires Sharefile

October 18, 2011

Citrix Systems announced this week that it acquired ShareFile, a provider of secure, cloud-based data storage, sharing and collaboration. The company provides businesses with the ability to securely store, sync and share documents and files, both inside and outside the enterprise. ShareFile’s centralized cloud storage capability also allows users to share files across multiple devices and access them from any location. The purchase price was not disclosed, but Forbes recently reported that Citrix offered to acquire competing cloud file sharing and storage startup for nearly $600 million.

The acquisition of ShareFile is highly strategic for Citrix. It will become a part of Citrix’s new Data Sharing Group, which will build upon their “follow-me-data” strategy, giving users the ability to place their information in the cloud but maintain the security and data management capabilities IT departments require. Sharefile will enable Citrix to deliver collaboration, apps and data with increased accessibility and productivity on any device.

This deal is one of the first in what Signal Hill expects to be a series of transactions that will enable large IT vendors to deliver the enterprise equivalent of a DropBox-like solution around cloud collaboration and file sharing capabilities. Dropbox is the cloud storage startup that announced a new $250 million funding round this week. The investment values the company, which boasts 50 million users and $240 million of expected 2011 revenue, at an estimated $4 billion. DropBox is considered by many as a consumer focused offering and lacks many of the security and compliance features typical of enterprise class products., which offers a similar service but is more enterprise focused, also announced recently that it closed $81 million in new funding at a $600 million plus valuation, after reportedly turning down Citrix’s offer.

Given the projected growth in cloud-related spending and the fact that this space touches on a multitude of hot trends (such as scale-out storage, collaboration and enterprise mobility), in an otherwise gloomy IT spending environment, we wouldn’t be surprised to continue seeing strategic acquisitions by large companies and even healthier deal values as the year comes to a close.

No Summer Recess for the Active Data Center Automation Sector

August 22, 2007

Joel Strauch

Joel Strauch

High Multiples for IT Operations & Management M&A

Broader adoption of disruptive technologies in the IT Operations & Management sector continues to drive high growth opportunities for vendors and high multiples on both M&A and capital markets valuations.  In the waning weeks of July rather than winding down for the dog days of summer, vendors focused on solutions addressing the automation of the operations of data centers were quite busy.

On July 19th, BMC announced its acquisition of RealOps, a vendor of run book automation solutions.  While the value of the deal was not disclosed, analysts have estimated a transaction value in the $50 to $60 million range, comparable to the approximately $53 million Opsware paid to acquire competitor iConclude in March of this year.  Neither RealOps nor iConclude have disclosed their revenues at the time of these transactions but analyst estimates have generally been in the $5 million range which, if correct, would translate into deal multiples around 10x.

Four days later (July 23rd), HP announced its intentions to acquire Opsware at a share price that reflected a 40% premium to the most recent trade and which translates into an enterprise value of approximately $1.6 billion or roughly 15x Opsware’s revenue for the twelve months prior to the deal.

Shortly after that, on July 25th, BladeLogic a competitor to Opsware and a partner of RealOps, priced its initial public offering at $17 per share.  The value of the shares surged over 40% in the first day of trading to $24.  At that price, the implied enterprise value of BladeLogic is approximately $550 million or around 12x BladeLogic’s revenue for the twelve months prior to the IPO.

While the market has been strong for infrastructure software recently, the multiples of these three related transactions compare quite favorably to the median revenue multiple of around 4x for all infrastructure software transactions in the Updata Advisors proprietary deal database over the past 18 months.  Why are the multiples so high?  For the same reasons we have been pointing to in our most recent newsletter – growth and sector leadership.  Opsware grew revenues between fiscal 2006 (ending Jan 31) and fiscal 2007 at a rate of 66%.  BladeLogic exceeded that with a year over year revenue growth rate for the quarter prior to its IPO of 131%.  iConclude and RealOps are two of only a handful of vendors addressing an emerging area core to broader data center automation – run book automation.

As a proof that this trend didn’t end in July, during a two day span in mid-August VMware priced its highly anticipated IPO (and began trading at an enterprise value around 20x the last twelve months revenues) and Citrix announced its acquisition of XenSource (a competitor to VMware with revenues of less than $5 million) for approximately $500 million.  Growth is once again the underlying theme here.  VMware’s revenues were growing 90% annually in the quarter prior to the IPO and Citrix has claimed it expects XenSource revenue to grow to over $50 million in the next year.

Given the fact that we are still early in the adoption of broader data center automation, we do not expect the trend of high multiple transactions involving disruptive technologies enabling data center automation to end any time soon.


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