M&A Challenges October of 1999 Ken Sexton, SVP & CFO - PowerPoint PPT Presentation

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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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M&A Challenges October of 1999 Ken Sexton, SVP & CFO

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M a challenges october of 1999 ken sexton svp cfo l.jpg

M&A ChallengesOctober of 1999Ken Sexton, SVP & CFO


Outline l.jpg

Outline

  • Background

  • M&A War Stories

  • Lessons Learned

  • Conclusion


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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


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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


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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


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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


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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


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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


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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


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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


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    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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