After the recent Yahoo acquisition of Kelkoo for $579M, yesterdays news on Veritas purchase of the e-mail archiving software company KVault Software Ltd., or KVS, for about $225 million cash is another good indication of the health of the technology M&A market in Europe.
This is good news, not so only because some of the VC involved will generate a good return for their limited partner (which will funnel more money in the asset class and fuel innovation and SME growth) but also because is will increase the VC spending in European technology asset (as the example will illustrates that good return can be generate from the Euro region)
KVS has received $37 million in financing since its inception in 1999, including a $17 million Series B round of financing in September 2003, from Index Ventures, Financial Technology Ventures, Greenaap Consultants Ltd. and Mosaic Private Equity. Other investors include Cazenove Private Equity and Lehman Brothers European Venture Capital.
KVS posted revenue of $23 million for 2003. Veritas said that it expects the transaction to add to its earnings within 12 to 18 months. Hedger said that KVS isn't profitable, as it has been focused on growth.
KVS provides content archiving software, in particular for e-mail, to preserve companies' intellectual capital. The company says its flagship product, Enterprise Vault, reduces storage costs and allows companies to manage and search content within Microsoft Exchange, Microsoft Office, Microsoft SharePoint and FileSystems. Veritas currently operates in the data protection, storage and server management, and application performance management fields. Through the acquisition of KVS, Veritas plans to extend its offerings in the storage software market by offering products for storage, management, backup and archiving of corporate information.
Thanks for starting the blog first of all. But a general question would be where this valuation comes from. I can name Kelkoo or the German Jamba and now KVS. At $23 Million in revenue, and no profit, I wonder which valuation they used. I know it's always an estimate and in the end is just a question of when the deal closes, but these numbers all seem to be amazingly high.
Do they bank on more revenue pushing their stock price?
In the make or buy question, can't you build an eMail archiving system for $200 Million? ;) [make that $20 million and use $180 as a marketing campaign to push others out of the way]
Your thoughts would be appreciated :)
Posted by: Oliver Thylmann | September 06, 2004 at 07:52 AM
Oliver,
Just posted a long reply on your hard question on valuation (cf post of Sept 7)
Hope it makes sense...
Thanks for the feedback on the blog
Keep the question coming
Marc.
Posted by: Marc Goldberg | September 08, 2004 at 12:05 AM