Deep-pocketed acquirers could bid up capacity-planning valuations

Contact: Ben Kolada

In a recent report, my colleague Rachel Chalmers discusses opportunities for some of the largest IT firms to fill holes in infrastructure management capacity planning through M&A. However, if bidding increases for the remaining startups in this sector, valuations could rise above the current estimated $100m record set by VMware’s Integrien acquisition.

Capacity planning is similar to performance monitoring. However, monitoring can only tell you what happened in the past, or at best, what’s happening now. Capacity planning requires you to have some idea of what will happen in the future. We’ve seen some dealmaking in this sector already, with each of the primary precedent transactions being valued well above the market average. However, many of the remaining potential acquirers have very deep pockets and intense bidding by this group for the decreasing pool of available targets could elevate valuations. Chalmers’ report cites Oracle, HP, IBM and Microsoft as still missing some capacity-planning capabilities – these four firms have a combined $100bn in cash and cash equivalents in their war chests. Click here for the full report, which includes current market valuations and details some of the most likely acquisition candidates.