In this “bonus” episode, Brandon and I discuss Compuware going private (Thoma Bravo announced they were acquiring them) and the how private equity fits into the full life-cycle of a software company.
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Excellent coverage from 451’s Dennis Callaghan of the deal, inc. all the numbers and valuation figures you’d want, opening with
“After more than a year of speculation and other reported offers, Compuware has agreed to sell itself to private equity (PE) firm Thoma Bravo for $10.92 per share, or $2.5bn. Thoma Bravo gets a valuable asset in mainframe and application performance management (APM) that has already unloaded most of its unwanted baggage. We expect the PE firm to build on its new portfolio company – its first move may be a merger with existing Thoma Bravo property Keynote Systems.”
A good return for the “activist investor” involved: “Jesse Cohn, the portfolio manager at [Elliott Management Corp. who owned ~9.5% of Compuware] involved with the Compuware investment, said the deal delivered a 30 percent return for his firm.”
Further: The Elliot Management folks are busy in tech: BMC, pressure EMC, Novell and has Attachmatte. Also LANdesk, Tripwire, Keynote, Embarcadeo (which has Borland, right?). Dell bought SonicWALL from them.
“We began with the I.P.O. of Covisint, initiated a robust dividend, divested noncore operations, and aggressively reduced corporate expenses,” Compuware’s chief executive, Bob Paul, said in a statement. “Compuware is now best suited to focus on its core mainframe and APM businesses as a private-equity backed company, where we can continue to serve our customers in a competitive environment with greater flexibility to take a long-term approach.”
- As always, Geoffrey Moore’s book Escape Velocity is a great overview of how companies like Compuware can strategically plan and operate to re-invent themselves.