Private Equity Firm vs. Venture Capital -- What it Means to Customers and the Market
But private equity firms typically have different goals. They are more conservative in their investments and in the case of Emptoris, I suspect that MEP either made the investment to flip the company in a couple of years (because they got a great deal on it given the market conditions and they had the cash available) or to use it as a foundation for a roll-up of multiple companies (something Emptoris has claimed is not the case, unless the acquisitions are a strategic fit).
Regardless, I suspect that they will certainly focus on making Emptoris as operationally efficient as possible. But since many development and back office jobs have already been moved to India, there is probably not much more cost to cut here, but I'm sure they'll identify some areas to take unnecessary cost out of the business. Such is the standard modus operandi in private equity (at least effective private equity).
In addition, I suspect that MEP will provide significant oversight in eying and analyzing acquisition targets -- both financial and strategic -- that will seek to complement and grow their investment. Despite what Avner told me a couple of days ago, Emptoris could very well become more of a holding company for multiple procurement, operational and related technologies if MEP decides that's the direction they want to take it.
Emptoris' current cash position does not matter much here in doing deals necessarily. Why? Since MEP owns Emptoris, they can put their own money into acquisitions regardless of whether Emptoris has enough cash on the books as of today. The good news for Emptoris is that it positions them well for both small and large potential buyouts if MEP can back-up their initial investment with further acquisition capital.
But what might those tender acquisitive morsels (or lumps) look like if MEP and Emptoris goes down the acquisition path? Stay tuned. Later this week, I'll offer some thoughts on who would be on my shopping list in this impossibly difficult capital markets environment. Listen close, as you can be sure that Ariba and others are considering the same names. I have no doubt that throughout 2009, there's sure to be some good buy-out pickings thanks to all the investment pain going around.
- Jason Busch
Supply and Demand Chain Executive lists a number of other supply/procurement oriented software investments that Marlin Equity Partners holds. Do you think that as an alternative (or in addition to having Emptoris acquire other companies in the market), MEP may have Emptoris absorb one or more companies in their portfolio?
I also would add that PE firms will certainly look for the bigger payout of an IPO if they can get it. MEP would certainly consider wrapping up a few companies, stategically related of course, under Emptoris and then look for an IPO when the market rebounds, no?
From Supply and Demand Chain Executive:
Marlin has experience and investments in other supply chain, enterprise resource planning and manufacturing software companies, including: Chelford Group, which provides ERP and supply chain software solutions; VantagePoint Systems, provider of ERP software solutions for manufacturers in the packaging industry; and Solarsoft, which offers ERP software for manufacturing, distribution and merchant and wholesale businesses.
Additional Marlin companies include Manufacturing Systems, which provides ERP software and services for discrete manufacturers; Relevant Business Systems, which targets the aerospace and defense, engineer-to-order, contract manufacturing, maintenance repair and overhaul and project-oriented manufacturing markets; and SupplyWorks, which provides supply chain management (SCM) software and services for discrete manufacturers.
http://www.sdcexec.com/web/online/Money-Issues/Emp...$10931
Noted your ongoing coverage of the private equity investment in Emptoris, and Marlin Equity put out a press release today providing some detail on the investment:
http://www.marketwire.com/press-release/Marlin-Equ...
"Marlin's investment in the company was structured to include 1.) a buy-out of the existing venture capital investors, 2.) extinguish certain liabilities, and 3.) fund an additional $20 million in working capital to ensure the company's continued growth ....
4.) additionally, Marlin has allocated a significant amount of capital to fund future strategic acquisitions."
Sounds like a healthy committment
Did you catch the Ariba earnings call? Some good, some bad I guess.
However, I'm interested in your perspective on a few topics mentioned: their sales cooling off, longer sales cycles, layoffs at the company, etc.
I've seen some back and forth and analysis here on some other companies, such as BasWare and Emptoris. I'd like to get your take on Ariba's health, both as to the viability of the company and in terms of the solutions the company provides, pros and cons.