Early-mover (dis)advantage at Daptiv

Contact: Brenon Daly

So much for early-mover advantage. Daptiv – a pioneering Web-hosted project and portfolio management (PPM) startup founded in 1997 that was originally known as eProject – got sold for scraps late last week. The sale to a buyout shop stands as particularly disadvantaged when compared to earlier deals in the market, a number of which saw giant software companies writing checks in the hundreds of millions of dollars to snap up other PPM vendors. (See our full report on the deal.)

While its rivals were selling out (at rather nice multiples, thank you very much), Daptiv was focusing on selling its product. And it was doing a fair job at that, running at around $20m in revenue. (Incidentally, that’s true revenue, not bookings at the subscription-based company.) Along the way, Daptiv managed to raise about $30m from backers, following a recapitalization in the mid-2000s. So far, so good.

Problems began surfacing at Daptiv earlier this year, however. The company went through a restructuring, trimming about 15% of its employees and swapping out its CEO. It had been trying to raise another round of funding, but we suspect that it found its existing investment syndicate rather frayed. (Daptiv includes Vault Capital as well as Pinpoint Ventures among its investors. Neither firm is particularly active – or even lively – these days.)

While Daptiv had been out looking to drum up dollars from venture capitalists, the company had also been in talks with a firm on the other end of the entrepreneurial spectrum: buyout shop Parallax Capital Partners. Parallax Capital has acquired a number of other tech businesses that have gotten a bit long in the tooth, and, like other additions to its portfolio, it reportedly got a bargain in its acquisition of Daptiv. One report, which included photocopies of the purchase agreement, indicated that Parallax Capital is paying just $12.7m for Daptiv, with only $5.3m of that flowing to shareholders.

Select PPM transactions

Date announced Acquirer Target Deal value
July 27, 2010 Parallax Capital Partners Daptiv (fka eProject) Reported $12.7m
October 8, 2008 Oracle Primavera Software $350m*
June 9, 2005 CA Technologies Niku $350m
June 10, 2003 Mercury Interactive (now HP) Kintana $225m

Source: The 451 M&A KnowledgeBase *451 Group estimate