Tag: MArlin Equity

PE firm Marlin buys BIOS provider Phoenix Technologies

Brenon Daly

Contact: John Abbott

Perhaps it was inevitable. Following the firing of CEO Woody Hobbs earlier this year and the subsequent divestment of three noncore businesses, BIOS maker Phoenix Technologies has itself been acquired. Los Angeles-based private equity firm Marlin Equity Partners offered $3.85 per share, giving the proposed deal an equity value of $139m. (Phoenix held $40m of cash, giving the transaction an enterprise value of $99m). The bid represents a 27% premium over Tuesday’s closing price.

Despite its recent troubles, and the seemingly cyclical nature of its business that has resulted in regular boom and bust periods, Phoenix remains by far the independent market leader in the core systems software marketplace, in particular BIOS software, as required by all Wintel PCs. BIOS remains a vital point of control for OS and desktop management. But under pressure from Intel and open source alternatives, the company has tried on numerous occasions – without any noticeable success – to diversify. That has usually resulted in Phoenix taking its eye off the ball of its core business, which entails maintaining relationships with the big PC vendors as well as the white-box original design manufacturers (ODMs) from Taiwan.

Revenue in the third quarter declined 16% year over year to $13.7m, but Phoenix scraped together a small operating profit, its first since 2008. Ninety staff were cut during the quarter, taking the firm’s total down to 313. Future growth depends on the take-up from OEMs and ODMs of its latest product, SecureCore Tiano 2.0, which began shipping in late March. Phoenix claims 50 wins so far and is working on a further 80 projects for this design cycle. The first systems using the new version should reach the market in fiscal 2011.

A PE rebound?

Brenon Daly

Contact: Brenon Daly

After the turmoil in the credit market essentially knocked PE shops out of tech M&A for much of the past two years, we’re hearing various indications that buyouts may be coming back. We recently noted the rumor in the market that in the coming weeks PE firm Francisco Partners will ink in the paperwork for a public offering for one of its portfolio companies, RedPrairie. And bankers indicate financial buyers are once again looking to add to their portfolios, rather than just support their existing investments.

Meanwhile, on the other end of the PE lifecycle, there’s also some bullishness for buyout funds from limited partners, at least according to one source. Marlin Equity Partners is said to have recently raised a $450m third fund – and even had commitments for up to $600m. Los Angeles-based Marlin, which last raised a $300m fund two years ago, didn’t return a call.

Of course, we have to look at any rebound in the overall LBO market in context. Certainly, we have seen some notable purchases this year by Symphony Technology Group, Vista Equity Partners and Thoma Bravo – as well as, of course, the pending carve-out of Skype, which is being led by Silver Lake Partners. But even with all of that, the value of tech LBOs announced so far in 2009 is only $12bn – just half the $23bn announced in the same period last year. And forget about the time when the buyout barons accounted for more that one-quarter of all tech M&A spending; so far this year, the share of PE firms of overall deal flow is just 11%.