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Q: current valuations of software services for mergers or acquisitions of companies ( No Answer,   1 Comment )
Question  
Subject: current valuations of software services for mergers or acquisitions of companies
Category: Business and Money
Asked by: mohankancharla-ga
List Price: $50.00
Posted: 26 Sep 2003 10:09 PDT
Expires: 26 Oct 2003 09:09 PST
Question ID: 260515
We are trying to aquire a stake in a software company in India. This
company is specializing in the ERP area. We would like to know how
these companies are being valued in the current market for mergers or
acquisions and how the values are being derived recently. We would
like to have a case study, if possible, with a similar company who is
also specializing in ERP and
with CMM Level 5.

Clarification of Question by mohankancharla-ga on 27 Sep 2003 11:29 PDT
We definitely require some kind of case study and documentation supporting it.

Clarification of Question by mohankancharla-ga on 27 Sep 2003 15:29 PDT
Please keep into consideration that we are trying to acquire an Indian
company. So, the case study should reflect this.

Request for Question Clarification by sublime1-ga on 27 Sep 2003 22:34 PDT
mohankancharla...

"TripleTree is a leading investment banking firm dedicated
 to meeting the needs of IT services, software and healthcare
 companies. Specializing in mergers and acquisitions, we focus
 on representing growth-oriented companies with revenues
 generally under $100 million."
http://www.triple-tree.com/about.htm

They have a newsletter called Value Tracker, which is 
available in pdf format:

"The ValueTracker is a monthly online resource designed
 exclusively for business owners and executives of software
 and IT services firms. The ValueTracker provides the most
 up-to-date information on marketplace valuations as well
 as insight into the rapidly consolidating merger and
 acquisition arena comprised of leading public and private
 players. The Value Tracker tracks the price to earnings
 and price to revenue of public IT firms and reports the
 sales price of mergers and acquisitions occurring in the
 software and IT services industry."
http://www.triple-tree.com/value_tracker.htm

The current listing, available at the following link,
notes that for Enterprise Resource Planning, under 
Software and Enabling Technologies, the August '03
Price/Revenue Multiple is 2.5x, up from 2.3x in July '03,
and up from 1.4x in August '02. They also provide the
current Enterprise Value/Revenue multiple, at 1.7x, and
the Price/Earnings multiple at 30.3x (see page 1).
http://www.triple-tree.com/valuetracker/VT.pdf

I found this site as a result of a Google search for
mergers +"IT" "times trailing revenues"
://www.google.com/search?q=mergers+%2B%22IT%22+%22times+trailing+revenues%22

Note that, when I added the term 'India' or 'Indian' to
the search, it returned 0 results, which makes me think
it unlikely that you will find a report specific to an
Indian company:

india mergers +"IT" "times trailing revenues"
://www.google.com/search?q=india+mergers+%2B%22IT%22+%22times+trailing+revenues%22

The ValueTracker did note this, in regard to India:
"Valuation multiples in the application outsourcing
 sector increased slightly to 1.7x last month. Corio
 posted a 55% gain following an announcement that it
 is expanding its Indian operations."
 - from page 3 of the pdf file

Perhaps you might make use of Triple Tree's services
in deciding about your acquisition:

"TripleTree's robust foundation and experience in IT and
 healthcare ignite our clients' ability to make effective
 strategic and financial decisions. With over 60 years of
 experience in investing as principals and developing IT
 services, software and healthcare businesses, TripleTree
 has the essential resources and networks to execute timely
 and successful transactions. Our continuous efforts to
 exceed client expectations and provide the highest level
 of personal service has paid off with tremendous bottom-line
 results for our clients." A testimonial from EXOCOM follows:
http://www.triple-tree.com/services.htm

Their contact page, including email addresses, is here:
http://www.triple-tree.com/contact.htm

Might this satisfy your needs?

Clarification of Question by mohankancharla-ga on 04 Oct 2003 17:40 PDT
As mentioned in the original request, we are a US based company trying
to acquire an Indian company. So the valuations of US based companies
does not truly apply. We are looking for a case study similar to the
information given below with the details of how the valuation is
arrived at.

BANGALORE: Mascot Systems Ltd (Mascot announced that its wholly owned
subsidiary Mascot Global Process Outsourcing Ltd (MGPO) has completed
the acquisition of the BPO business of IT&T Ltd. Separately, Mascot
also acquired the entire share capital of IT&T Technology Services
Ltd, which owns the Facility Management business.

Clarification of Question by mohankancharla-ga on 14 Oct 2003 02:08 PDT
I am not sure whether we are going to get the proper answer any time
soon. What should I do to get a quick response?
Answer  
There is no answer at this time.

Comments  
Subject: Re: current valuations of software services for mergers or acquisitions of companies
From: tvr-ga on 27 Sep 2003 00:26 PDT
 
Hello!

I came across a report recently by a reputed management company that
put Mergers in the I.T. sector in the U.S. at 3.2 times trailing
revenues (assuming my memory is correct) i.e. if the company had
revenues of 10 Million last year it would probably be valued at 32
Million.

Hope this helps.

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