American private equity can't wait to gobble up Euro stalwart Software AG Private equity investor Silver Lake has tabled a bid to take over Software AG, a longstanding stalwart of the European software industry, for an implied value of around €2.2 billion. Founded in 1969, Software AG made inroads in the global software markets building database management systems and integration software for …
Beginning of the end to me.
Anytime an American “group” buys anything, it’s about making money, fast. Fuck everything and anyone, history, values, customs etc. etc.
These people only care about making a quick profit.
My advice to anyone working for that company is simple, get out now.
Worked for a company who were bought by Silver Lake. We had two 'bad' quarters ie not meeting their big targets, and it was 'Resource Action' time. The irony was that within a year, we were back to the same number of staff, including rehiring some of the people who'd just been made redundant. The double irony was the company was then sold to IBM, so 'Resource Actions' became a regular thing.
Same, at “all hands meetings” everyone was watching for the EBDITA results (https://www.investopedia.com/terms/e/ebitda.asp) as apparently all the loans taken to buy the company had conditions on the level of EBDITA they had to be above to not be in default. Bad figures that quarter, then layoffs followed quickly.
There in general three problems with a US buyout of a EU entity:
1 - the buyout tends to be leveraged, so the entity is instantly saddled with debt. More so if it's viable as more can be leveraged against it
2 - the buyers tend to be interested in the numbers, not the product. The cart before the horse problem with that is that the numbers only exist because of the product, and taking your eyes of that ball harms the money. But that lesson is never learned because the money focus also isn't interested in long term, it's all about the now.
3 - it exposes the entity to US laws such as Cloud Act and other mechanisms that will harm its independence and possible even its ability to merely continue to function in a European market that by now has picked up the value of privacy. Not enough IMHO, but sufficiently to create friction.
So yes, not good news IMHO - other than for the shareholders who want to see a quick profit instead of a sustainable one. It's not Twitter - there a shareholder would have been utterly daft not to agree to a buyout which overvalued the company to the point you would have been insane to reject..
They will asset strip the company, sell off bits and then exit stage right leaving a shell with a few gazillion in Debt.
This is their Modus Operandi. We have seen it happen time after time after time over the years.
What about the customers?
They (silver Lake) simply don't care.
Like El Trumpo, all they care about is the green.
Anytime an American “group” buys anything, it’s about making money, fast. Fuck everything and anyone, history, values, customs etc. etc.
Not always.
US venture firms such as Golden Gate provided the capital that bought the Micro Focus unit away from Merant in 2001, unwinding the disastrous Intersolv merger of 1998. Merant was already in a tailspin in 2001, and Micro Focus thrived, paid back Golden Gate, went public again, and eventually bought the remains of Merant (by buying Serena in 2016, after Serena bought Merant in 2004).
That was a Good Thing for Micro Focus. I was there. It also allowed Micro Focus to buy Borland, part of Compuware, and the CORBA vendors, and to merge with Attachmate Group – and it kept those products alive (with a handful of exceptions they're all still around), which as we all know is often not the case after ISV M&As. And keeping the products available, supported, and updated 1 is what really matters to customers.
The merger with the software side of HP was definitely shakier, but again the products were kept alive.
And then OpenText bought MF this year, and shareholders made some money, and those products continue to be available and developed. Acquisition is always worrying but so far things seem encouraging.
Business is often ugly, it's true. But that doesn't mean taking a company private is always the road to ruin. Merant under Greenfield was a basket case and being taken private saved Micro Focus. Running a business takes money and when a public software firm is struggling to keep shareholders happy, an acquisition is probably going to happen regardless. So taking what looks like the best opportunity2 is not failure or capitulation.
(While I was on the inside for all of the Micro Focus saga, everything here is public information or opinion.)
1MF is sometimes accused of being a software retirement home, but nearly all the product lines – even ones with relatively small market share that are overshadowed by our own competing products – have regular updates with fixes, enhancements, and new features. Visual COBOL is the flagship COBOL product, but ACU and RM still have a regular release cycle. Visibroker is the flagship ORB, but Orbix gets updates too. ArcSight is the flagship but Sentinel is still getting refreshes. And so on.
2Of course this will be a gamble. It's a type of stopping problem, like the Secretary Problem.
Silver Lake was the codename for the IBM AS/400 pre its release - a reference to the IBM plant that was in Rochester Minnesota (now closed) - where it was being developed/built. The Silver Lake in Rochester was notable in that it didn't freeze over in the winter despite the fact the temperature was well below that required to freeze the balls off a brass monkey several times over. This was principally because it was fed by the cooling water from the local power plant. As such it was host to a year-round humongous mega-gaggle of geese - leading to the alternate internal codename of the AS/400 being Goose-Crap. Rochester was not that notable for much else - the local tourist guide mostly listed the Mayo Clinic Hospital and the bus station and the cemetery. The Mayo Clinic had underground tunnels to some of the hotels, I don't know if these also connected to the cemetery (cue Monty Python Prestatyn out of hotel and down the chute type jokes).
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