At $3.7bn, AppDynamics sells to Cisco at 17.3x, estimated

Based on the S-1 filings from the business, a $3.7B price implies a 17.3x enterprise value/trailing twelve month revenue multiple, which is 41% higher than the next nearest acquisition, Salesforce/Demandware. There’s no comparable pricing event in the M&A market in the last 10 years.

And, from Simon at The Register:

The Borg’s plucked the company mere days before it was expected to float on the stock market, an event expected to raise around US$1.4bn for a portion of the company.

While AppDynamics could point to over 2,000 customers and nine-figure revenues, it also had rather a lot of red ink to deal with. That’s Cisco’s problem now, as it will make AppDynamics a software business unit in its internet of things and applications business.

Source: The Biggest M&A Multiple in Software History

One in three tech IPOs now trading below their starting price

Around 33 per cent of the technology companies to enter the market in the last ten years are currently valued at a price lower than their IPO mark.

This according to researchers with analytics house Geckoboard, who studied 100 software, hardware, and social networking companies that have undertaken IPOs since 2006. Of those 100 companies, 67 are trading above their IPO valuation and 33 are below.

Link

American Apparel sells for $103m, not including stores

I’m always amazed at how low IRL companies get valued. But: retail, manufactoring, and a history of funky management:

But fashion wasn’t the only thing to change; the retail business changed, too. The economic downturn was hard on the fashion industry as consumers cut back on spending. And brick-and-mortar stores have struggled as online retailers bite into their sales and target demographics. That can be especially harmful for brands like American Apparel, whose the business model is to open a bevy of stores and rely on foot traffic. “There are too many stores in too many places,” explained Cohen. “Everybody doing business in brick-and-mortar is migrating in some way, shape, or form to the internet. Everyone is seeing a chronic decline in the productivity of their real estate.”

It doesn’t include the stores:

All of this helps explain why the $88 million Gildan deal could be viewed as arguably the last great American Apparel marketing feat. Even with all its financial and legal woes, the company still attracted 12 bids. (Sources told Reuters that Amazon and Forever 21 were considering purchasing as well.) And while Gildan won’t be purchasing any of American Apparel’s 110 U.S. stores—which were also up for sale—the company was willing to pay nearly $90 million just for intellectual property and some equipment. That’s quite a feat given that the brand was built on the premise of selling such basic designs.

Still, that brand, tho.

Link

Wild Turkey update

Campari seems thrilled — if a bit startled — by the attention Mr. McConaughey has been lavishing on Wild Turkey, which the company bought for $575 million in 2009 and where it has since poured $100 million into operations upgrades.

Also, growth:

For the fiscal first quarter, which ended in March, domestic sales of Wild Turkey increased 7.6 percent from the same period a year earlier.

Source: McConaughey doing ads for Wild Turkey.

Devaluing shaving

the tech community is celebrating the massive return for Dollar Shave Club’s investors, but $1 billion for a 16% unit share of a market dominated by a brand that cost $57 billion is startlingly small. Indeed, that’s why buying Dollar Shave Club was never an option for P&G: even if their model is superior P&G’s shareholders would never permit the abandonment of what made the company so successful for so long; a company so intently focused on growing revenue is incapable of slicing one of their most profitable lines by half or more.

The point being: that’s a really low valuation and could cause all sorts of annoying and “value destructing” side effects in the spreadsheet.

Source: Dollar Shave Club and The Disruption of Everything

Counting users instead of counting cash

The implication is that users/subscribers/audience members are loyal and will stay with the programming for some time. There is also a second implication that businesses which are not measured by audience size don’t have this loyal and recurring revenue base. The absence of an “audience” implies transience and impermanence and results in deep discounting of long-term viability.
Which is why ecosystems are the desired business construct for technology companies. They allow a more consistent and repeatable transaction model and offer a predictability which is sorely lacking […] when technology changes rapidly. It allows a company to define itself on its customers rather than on its products.

From Horace

Counting users instead of counting cash

Profile of SnapChat, and turning down billions

FORBES estimates that 50 million people currently use Snapchat. Median age: 18. Facebook, meanwhile, has admittedly has seen a decline among teenagers. Its average user is closer to 40.

“I can see why [SnapChat is] strategically valuable,” one leading venture capitalist tells FORBES. “But is it worth $3 billion? Not in any universe I’m aware of.

Profile of SnapChat, and turning down billions