contact: Scott Denne
Billion-dollar take-privates continue to rise to record levels as Vista Equity Partners pays $1.6bn for Infoblox. Vista has ended the network management vendor’s four-year run as a public company – a run that has seen shifts toward virtualization catch up with the target. Many of Infoblox’s capabilities – e.g., DNS, DHCP and IP address management – are now included in different virtualization and cloud management products. As that has happened, Infoblox’s growth has slowed and it has become more reliant on specialty deployments, particularly for security, which now generates 16% of sales, up from 8% a year ago.
Today’s deal marks the third time this year that Vista has taken a public company off the market. The first two, Marketo and Cvent, went off at 8x trailing revenue – aggressive multiples for a private equity (PE) transaction. By comparison, Infoblox is selling for 3.7x. Marketo and Cvent were posting about 30% annual revenue growth at the time of their sales. Infoblox, on the other hand, was slightly down year over year last quarter and expects 6% or less growth over its recently begun fiscal year.
Being lower than Vista’s recent deals doesn’t mean that Infoblox isn’t commanding a strong multiple. Despite growth challenges and the fact that it puts up negative EBITDA – squinting past a restructuring charge gets it nearly in the black this year – Infoblox’s multiple comes in right at the median multiple for similar transactions.
Availability of debt has helped drive PE deals to recent highs. According to 451 Research’s M&A KnowledgeBase, there have now been 10 take-privates by PE firms valued at or above $1bn, more than any other full year in the past decade. (The total value of such transactions is higher than most years, but not breaking records as no single deal has cracked $5bn).
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