EnerNOC and Comverge both went public in 2007, barely a month apart from each other. Since then, however, the paths of the two energy demand response vendors have diverged dramatically. EnerNOC’s revenue has more than quadrupled from $61m in 2007 to $287m in 2011. Meanwhile, Comverge has plodded along, growing at less than half the rate of its rival. But the real problem with the company wasn’t its top line, but rather its liquidity position: Comverge was on the verge of breaching its debt covenants.
It was that shaky financial position that helped to push Comverge into a capitulation sale to H.I.G. Capital earlier this week. The buyout firm is paying just $49m, or $1.75 for each share. (That basically equals the trading price for Comverge over the past week but is a far cry from when the stock changed hands above $30 back in 2007.) H.I.G.’s offer values Comverge at a measly 0.4 times trailing sales. That’s about half the valuation that EnerNOC currently garners, and that’s after shares of the company have lost nearly two-thirds of their value over the past year or so.
So how did the rival firms end up in such different places after starting from a similar spot? Part of the answer may have to do with the M&A activity from each of the players. EnerNOC has spent more than $60m on four acquisitions over the past three years, while Comverge shied away from rolling the dice on M&A.
Select EnerNOC deals
Source: The 451 M&A KnowledgeBase