m a challenges october of 1999 ken sexton svp cfo
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M&A Challenges October of 1999 Ken Sexton, SVP & CFO

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M&A Challenges October of 1999 Ken Sexton, SVP & CFO Outline Background M&A War Stories Lessons Learned Conclusion MERANT Today Combination of Micro Focus plc and INTERSOLV, Inc Worldwide Presence - 50 countries NASDAQ & London Exchange Revenues $375 Million+ $600 Million Market Cap

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Presentation Transcript
outline
Outline
  • Background
  • M&A War Stories
  • Lessons Learned
  • Conclusion
merant today
MERANT Today
  • Combination of Micro Focus plc and INTERSOLV, Inc
  • Worldwide Presence - 50 countries
  • NASDAQ & London Exchange
  • Revenues $375 Million+
  • $600 Million Market Cap
  • $120 Million in Cash
  • M&A History

Leader in Enterprise Application Development

belgium acquisition
Belgium Acquisition……
  • Company Background
    • Belgium based
    • VC funded…Plans to go Public
    • $20m business, with losses
    • Large in Japan
  • Strategic Reasons
    • Buy vs. build….time to market
    • Presence in Japan
  • Sellers Objective
    • VC’s want high return!
    • Show me the money
belgium acquisition5
Belgium Acquisition…..
  • Lets Make a Deal
    • Oct. 95
    • Pooling Transaction
    • $80m Value
  • Good News
    • Technology Fits
    • Non-US Shareholders more Liquid
    • Stability of Belgium Employees
  • Bad News
    • Never Leveraged Japan
    • Expensive to Restructure
    • Belgium’s View of Options & Bonuses
    • Dilutive….Never paid for itself
uk acquisition
UK Acquisition…...
  • Company Background
    • Founder owned 45%
    • VC owned 45%
    • UK based
    • $10m in Revenue
  • Strategic Reasons
    • Complementary product
    • SYNERGY+
  • Seller’s Objective
    • VC…Liquidity
    • Founder…Wealth
uk acquisition7
UK Acquisition…….
  • Lets Make a Deal
    • March 98
    • $20m Value
    • Pooling….All Stock
  • Good News
    • Marriage Made in Heaven
    • UK Shareholders Long-term View
    • Stability of UK Employees
  • Bad News
    • US Employment Practices
    • Expensive to Restructure
    • Negotiations Focused on Governing Law
    • Weakness of Non-competes
micro focus intersolv merger
Micro Focus + INTERSOLV Merger
  • Micro Focus
    • CA based, with UK Roots
    • Founded in London
    • London Exchange
  • INTERSOLV
    • MD Based
    • 15 Year History of M&A
    • NASDAQ Listed
  • Merger Overview
    • Merger of Equals
    • Micro Focus Acquired INTERSOLV
    • $500m Value
    • Pooling in US
    • Purchase Method in UK
micro focus intersolv merger good news
Micro Focus + INTERSOLV MergerGood News……..
  • Communications to Shareholders
    • Solicitation Rules in UK
    • Geographical Concentration
  • LSE Flexibility
  • Focus on EBITDA (Cash)
  • UK Shareholders More Long-term
  • Lawsuits More Likely in US
micro focus intersolv merger bad news
Micro Focus + INTERSOLV MergerBad News………..
  • Two Sets of Rules
      • GAAP
      • LSE vs SEC
      • Anti-Trust
  • Two Sets of Practices
      • Press Releases
      • Face-to-face Meetings
  • LSE’s Acquisition Requirements
  • UK Rules Dilute Lock-up Provisions
  • US Shareholders View of ADRs
  • UK Shareholders View of Options
  • Long-term Nature of UK…Effect on Liquidity
cross boarder complications
Cross-Boarder Complications
  • Stock Exchange Rules
    • NASDAQ 10% Rule vs. Multiple LSE Rules
    • Disclosures in complete conflict
  • Accounting Rules
    • Pooling vs Purchase
    • Pre-goodwill Earnings
  • Local Practices
    • Press Releases….variances of styles
    • Employment Law
    • Incentives…Options & Bonus
  • Global View
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