EMC’s core business no longer in sync with file sharing

Contact: Alan Pelz-Sharpe Scott Denne

Storage giant EMC has announced that it is selling its enterprise file-sync/share (EFFS) product division, Syncplicity, to private equity (PE) firm Skyview Capital for an undisclosed amount. It’s the first PE deal in the EFSS world, and follows BlackBerry’s acquisition of WatchDox and the Box IPO. No doubt more deals are to come in this rapidly maturing sector.

Following the close of the transaction (expected later this month), EMC will retain a minority interest in the business it has owned for the past three years. Syncplicity was originally acquired by EMC at a price that seemed a bit expensive (see our estimate of that deal here ). Yet in the three short years since, Syncplicity has thrived within EMC. We estimate that its revenue has grown substantially during that period – in no small part due to EMC’s sales team (see our estimate of Syncplicity’s revenue here).

EMC already has multiple EFSS products, and this division, though doing well, wasn’t core to its overall business. So divesting it and gaining good hard cash in the process was logical. It is, however, a tough pill to swallow for the Syncplicity team, who had been given free rein to operate as a startup and did exceptionally well to make it one of the top players in its sector. Even so, EFSS is a small business for EMC and parting ways makes perfect sense.

We’ll have a more detailed report on this transaction in tomorrow’s 451 Market Insight.

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