2007: The Year of Enterprise M&A

First week of the new year, and we have a nice-sized ($830M) acquisition of IronPort Systems by Cisco. Here's a link to the press release.

All Hail The Return Of The Enterprise M&A Market!

OK. So, maybe I'm a bit premature with my celebration... But, I don't think so.

IronPort got started in 2000 and toughed it out through some slow years for the enterprise market. They persisted and grew. Their products are not sexy, but certainly are needed. The uptick in IT spending in 2006 likely brought them a nice valuation kicker to support the lovely acquisition price of $830M.

There are many Enterprise/IT startups that are in a similar position right now. Increasing sales traction, no real IPO market available, but the big boys still need them to grow their product/technology portfolio, customer base, and market share. And, where else will they get to an exit?

My 2007 prediction is for a marked increase in M&A transactions for Enterprise/IT focused startup companies. Bigger valuations, combined with the need for VC firms to wind down some of their 1999 and 2000 vintage funds will add fuel to the fire.

So, was the IronPort deal a good deal? Some data:

Yahoo! Finance claims that the IronPort 2005 revenues were $28.2M.

Some say that IronPort was looking to the IPO market a few months ago. They clearly chose an alternate (and wiser) path.

IronPort released a press release in October, 2004, claiming $16.5M in gross bookings for the previous quarter. That's bigger than I would have expected and would imply that the Yahoo! Finance number quoted above is much smaller than the actual revenue amount for 2005.

IronPort was founded in 2000 and has 408 employees based primarily in San Bruno, Calif.

Not much else out there for Joe Public. My sense from these numbers and some other digging was that IronPort was likely looking at 2007 forward revenues of $160M+. Many congratulations to the IronPort founders, CEO Scott Weiss and VP Corporate Strategy Scott Banister for building a great company.

Om Malik covers the story here. And, VentureBeat covers the story here.

Tags: IronPort, Cisco, Acquisition, M&A, VC, Venture Capital, Brian Berliner, brianberliner

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