Private equity firms buying up software companies or customers?
By Tom Foremski - August 20, 2006
Here is AMR Research on private equity firms buying up smaller software companies to create large firms capable of competing with an SAP or IBM. But is it good for customers? It looks like the private equity firms are aggregating customer bases rather than creating a broad base of IT products.
From: Who Really Owns Your Software Vendor? By Jim Shepherd, Ian Finley, Laura McCaughey at AMR Research.
At a user conference in 2003, Mike Greenough, then CEO of SSA Global, said that his company had paid an average of $23,500 per customer to acquire 16,000 customers. Three years later, Golden Gate paid approximately $130,000 per customer in order to merge SSA Global with Infor. This might seem expensive, but AMR Research estimates that SSA Global was generating between $40,000 and $50,000 in annual revenue per customer.
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August 20, 2006 | Permalink | Comment | Category: Enterprise IT | Subscribe to SVW
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