Who’s not shopping for Epicor

In virtually any other credit market, we’d be tempted to hold out old-line ERP vendor Epicor Software as an exemplary buyout candidate. The company will do about $530m in revenue this year, with $200m of that coming in the easily bankable form of software maintenance fees. (And the company is hardly expensive, with an enterprise value that’s just 3.7x this year’s maintenance revenue.) Moreover, it’ll throw off some $65m in cash flow in 2008 to help cover a hypothetical leveraged buyout.

But as we said, these are not normal days for debt. So in our report last week on an activist hedge fund pushing the company to pursue ‘strategic alternatives,’ we focused on the strategic buyers that might be interested in – and could afford – Epicor. They are, in order of likelihood: Microsoft, Oracle and SAP. Truth be told, though, none of those acquirers seems likely. And while we’re scratching potential suitors for Epicor, we can go ahead and erase M2 Technology Partners.

The buyout firm, which launched in mid-June with backing from Accel-KKR, is headed by Mark Duffell and Michael Piraino, who served as Epicor’s COO and CFO, respectively, until earlier this year. We understand that M2 is exploring other opportunities in the business applications market, and may well have its inaugural investment signed, sealed and delivered by the end of the year. It won’t be Duffell and Piraino’s old shop Epicor, but just think how much time they’d save on due diligence if it were.

Significant ERP deals

Date Acquirer Target Price
December 2000 Microsoft Great Plains Software $1.1bn
May 2002 Microsoft Navision $1.3bn
June 2003 PeopleSoft JD Edwards $1.75bn
December 2004 Oracle PeopleSoft $10.46bn
June 2005 Lawson Intentia International $449m
November 2005 Golden Gate Capital Geac Computer $1bn
January 2008 Unit 4 Agresso Group Coda $314m

Source: The 451 M&A KnowledgeBase

One thought on “Who’s not shopping for Epicor

Comments are closed.