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Friday, March 03, 2006

Enterprise Software : Sensible Acquisitions

Matrix One, the PLM player goes.Dassault adds PLM capabilities to address the needs of its highly lucrative clients in the high-tech, consumer products and medical devices sectors. The 20% premium appears well justified given the neat fitment and matrix one’s customer base. 2.3 X sales is not a bad deal for the acquiring company. Matrix one has a good vertical penetration and has a wide customer base. Matrix One & its customers would be relieved as it was making losses almost every year. With Dassault’s strong relationship with IBM, the acquisition can be well leveraged. BEA’s acquisition of Fuego is an interesting one. Feugo’s BPM capabilities and its vertical strengths are a neat fit for BEA. BEA definitely needed the BPM layer and it has now got it – all major players have added capabilities in this space by acquisition – IBM, Microsoft, TIBCO etc in the recent past. Given the fact that BEA isseen as the leader in SOA,& their existing toolsets do not command the credibility for process management capabilities( this is an integral requirement for rearchitecting infrastructure/applications in the SOA world), and the price at which the buy out has happened all make it a good package overall. These are sensible acquisitions – definitely value accretive in the medium to long term and these are not meant buying customers or killing competition and are clearly aimed at enhancing abilities to service customers better unlike the other big acquisitions, mostly aimed at either pre-empting competition or for mere expansion of marketshare. I clearly see atleast 35-40 small players( <200 mill /annual revenue) waiting in the wings Also to note the fact that BPM, SOA space – all are high growth areas and to an extent PLM space are high visibility areas – and have seen some recent acquisitions happening. I clearly see more scope for acquisitions in the supply chain, logistics, retail, EAI, business rules, BPM, content Management, portals, SOA space to happen shortly. The crisis in the enterprise software market is there for all to see.

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