tag:blogger.com,1999:blog-8084335246882031620.post7588439786916028344..comments2023-08-06T06:46:39.885-07:00Comments on e-discovery 2.0: Seagate Acquires MetaLINCS For $80 millionAaref Hilalyhttp://www.blogger.com/profile/12607669425658681746noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8084335246882031620.post-70116115783947798582007-12-30T09:59:00.000-08:002007-12-30T09:59:00.000-08:00Hi Pushkar,Happy New Year to you! The key to under...Hi Pushkar,<BR/><BR/>Happy New Year to you! <BR/><BR/>The key to understanding multiples is to appreciate they are tied to growth. If a company has a low multiple, it is because it is not expected to grow very fast. <BR/><BR/>That raises the question, then, of why the market does not expect the companies you list to grow very fast? The answer is that they are not pure play e-discovery software companies. Most of Guidance's revenue comes from services or forensics; EMC and CommVault are storage companies; etc. These are slower-growing markets which command lower multiples. <BR/><BR/>Best,<BR/>AarefAaref Hilalyhttps://www.blogger.com/profile/12607669425658681746noreply@blogger.comtag:blogger.com,1999:blog-8084335246882031620.post-30905812534442612532007-12-28T07:12:00.000-08:002007-12-28T07:12:00.000-08:00Aaref:Talking about multiples and timing, do you t...Aaref:<BR/><BR/>Talking about multiples and timing, do you think the multiples for HummingBird (2.07) and Ibis (2.91) were very low as compared to the recent activity? Do you think that these companies should have waited an additional year? <BR/><BR/>Also, I am trying to understand the Price/Sales ratios of CommonVault, Guidance, EMC and OpenText. All of them are below 4. Does that imply that these companies are undervalued? If not, why would they pay such high multiples for their acquisitions? If yes, then why do you think is Wall Street undervaluing them? <BR/><BR/>I would really appreciate your comments and thoughts.<BR/><BR/>Also, wish you a Happy New Year!! <BR/><BR/>PushkarAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8084335246882031620.post-54225272395878420852007-12-17T08:16:00.000-08:002007-12-17T08:16:00.000-08:00I know the MetaLINCS folks well, we were retained ...I know the MetaLINCS folks well, we were retained by Ramon to place some key personnel before the acqusition. To a person they are all quite pleased with the deal.<BR/><BR/>More important though is what is this book about the LA Geographer?<BR/><BR/>I am a geography freak and Antique map collector , so this all intrigues me even more than the MetaLINCS deal.<BR/><BR/>Feel free to contact me directly to talk cartography or business.<BR/><BR/>All the best!<BR/><BR/>mp<BR/><BR/><BR/>Michael Potters <BR/>CEO/Managing Partner<BR/>The Glenmont Group<BR/>www.glenmontgroup.com<BR/>michael.potters@glenmontgroup.comMichael Pottershttps://www.blogger.com/profile/00261455278917455290noreply@blogger.comtag:blogger.com,1999:blog-8084335246882031620.post-82213539830068336482007-12-11T14:12:00.000-08:002007-12-11T14:12:00.000-08:00David,There are a couple of different rules-of-thu...David,<BR/><BR/>There are a couple of different rules-of-thumb for valuing companies: <BR/><BR/>1. Revenue multiples: Seagate paid 8-16X current year revenue; <BR/><BR/>2. Comparable transactions: Is MetaLINCS worth 50% of Stratify or 20% of ZANTAZ? <BR/><BR/>Any way you look at it, MetaLINCS got a great price and I am sure their shareholders are very happy. Companies commanding the kind of prices you quote (e.g., $300m) would have to be a market leader, which MetaLINCS is not. <BR/><BR/>Glad you enjoyed the book, hope we cross paths again soon. <BR/><BR/>All the best,<BR/>AarefAaref Hilalyhttps://www.blogger.com/profile/12607669425658681746noreply@blogger.comtag:blogger.com,1999:blog-8084335246882031620.post-57057548421179648722007-12-11T13:47:00.000-08:002007-12-11T13:47:00.000-08:00Hi Aarif,Regarding valuation, I think Seagate may ...Hi Aarif,<BR/><BR/>Regarding valuation, I think Seagate may have got a good deal. Based on rough rule of thumb: Firm that has established itself with good technology in the early stages of an important new market, fetches between $75 million and $300 million.<BR/><BR/>Were I on the MetaLINCS end, I would have thought there are reasonable arguments for a lot more than $80M--assuming your $80M figure is correct.<BR/><BR/>More details on the argument at http://www.ferris.com/2007/12/11/terms-of-seagatemetalincs-transaction/.<BR/><BR/>BTW, thanks again for the nice nice, if rather pessimistic, book by that LA geographer. I enjoyed it a lot.Anonymousnoreply@blogger.com