John Mascarenas Joins SASI as a Senior Advisor

Strategic Advisory Services International, LLC (SASI), a boutique M&A advisory firm to technology companies, today announced that John Mascarenas has joined the SASI team in the role of Senior Advisor.  John’s career spans more than 33 years in the high tech industry primarily in equity investments and M&A with a focus on Data Management, Compute Storage, Mobile, Flash, and Networking segments in Enterprise and Consumer.  Previously he was a Senior Director/Consultant for strategic equity investments and M&A at SanDisk Ventures and Senior Investment Director at Intel Capital.  John was with Intel Corp since 1980 and with Intel Capital since 1998 where he was directly involved in over 70+ private equity and M&A transactions with a total value of $1B+. Prior to Intel Capital, he held senior level positions at several Intel business units where his roles included strategic business alliances, sales, marketing, product service and engineering. He was also involved in several new technology startup ventures for Intel and has also started & sold two private companies.  John holds industrial design patents in digital imaging.  John will help guide SASI through its next growth phase and also help build key strategic relationships across venture firms, early stage start-ups and leading public technology companies. 
“Over the last ten years, I have had the opportunity to work with John on a number of engagements and have always been impressed with his business acumen, technical depth, and negotiating skills.  He brings a high level of integrity and passion to everything he does and I am excited to have him as part of the SASI team.”  said John Rotchford, Managing Director of SASI. 
About SASI
SASI is a boutique M&A advisory firm focused on serving investors and entrepreneurs in the IT industry.  We represent private companies that are exploring strategic M&A options.  SASI was founded on the belief that stakeholders in private companies have a need for a new class of M&A advisor. They require a banker with high integrity who brings not only transaction and financial expertise but also has intimate knowledge of the industry, the strategic buyers and the customer, technology, and competitive trends shaping the industry.  Our market focus is the IT industry with core areas of expertise across Data Protection and Storage, Cloud Computing/infrastructure, Networking and Security.  SASI has deep domain knowledge of these segments and has represented companies across core technologies areas including semiconductors, systems, software, and related IT services.  For more information please visit www.sasillc.com

Notable SASI Engagements:

 – Cofio, creator of AIMstore software which unifies Data Protection, Workflow, and Compliance, was acquired by Hitachi Data Systems. SASI drove the deal process from initial introductions to HDS through critical deal points in the purchase agreement and post-closing matters

– Nevex, provider of award-winning server-side caching software that guarantees storage performance for the applications that truly need it was acquired by Intel Corporation.  SASI was engaged to explore strategic options for Nevex including the sale of the company.  SASI led all discussions with interested strategic partners and ultimately drove the process toward a successful M&A exit.

– gen-E is an IT process automation (ITPA) software company.  SASI advised gen-E on a range of strategic options which ultimately led to the private equity investment by Solis Capital Partners. SASI identified, screened and approached leading private equity firms and drove the negotiation and due diligence process

Q1 2014 Storage M&A and Venture Funding Review

Q1 M&A was virtually non-existent with just two announced deals.  Both deals were smaller, cloud/SaaS consolidation deals with modest valuations.  There are a couple of factors worth mentioning that can be attributed to the dearth of M&A in Q1.   

  • Fundamental valuation disconnect between what strategic acquirers are willing to pay and the high funding valuations being won by storage start-ups.  Large incumbents are closely tracking disruptive start-ups and have M&A as a key part of their growth strategy.  They want to do deals but are finding it hard to match their valuation outcomes with what start-up management or investors think they are worth.  
  • Too early for many start-ups to consider M&A – Flush with new rounds of funding with product launches just occurring or soon to occurring
  • Buyers taking a wait and see approach – a storage “Bubble” in venture funding and planned IPO’s has led some buyers to take a wait and see approach

M&A will likely improve in Q2 and for the remainder of 2014 but will be below 2013 which had 25 deals worth $9.5B in consideration.  We do see some solid exits occurring in 2014 but expect things to really heat up in 2015 as many start-ups will approach an inflection point of going for the IPO “home run” or taking an early M&A exit.   

Storage related venture funding rolls on with $333M across 8 rounds with an average of $41.6M per round.  The quarter was dominated by Actifio, Nutanix and Tintri combining for $276M in funding, representing over 80% of the total funding for the quarter.    

2014 could easily be another billion dollar venture year, following 2013 and 2012, each with roughly a billion dollars in storage venture funding.  However, VCs will be closely watching the planned IPO’s for 2014 and also M&A exits to see if the market will support record setting later stage large rounds with record setting post-money valuations.   

For comments and questions, please contact John Rotchford, Managing Director at 760-944-3522 or john@sasillc.com.

2013 Storage Highlights

2013 M&A deal volume of 25 equals 2012 while total consideration jumps up to $9.5B, primarily driven by Avago’s Q4 purchase of LSI for $6.6B, representing 69% of the consideration for 2013.  In Q4 we also had Xyratex finding a home at Seagate for $374M and the “Hail Mary” merger of Tandberg and Overland. 

For the 25 transactions in 2013, the median deal size was $110M with a Price to Revenue Median of 5.0X.  There were 17 technology focused transactions with a median deal size of $98M and a Price to Revenue Multiple of 6.0X.  The remaining 8 transactions were business focused with a median deal size of $214M and a price to revenue multiple of 1.0X. 

In 2013 storage related venture funding was strong at $955M, a slight decline from 2012’s $978M.  The 43 rounds of funding had an average round size of $22.2M, similar to 2012’s $20.8M average round size for the 49 rounds.  2013 ended with two strong quarters of funding, $339M in Q3 and $249M in Q4, accounting for more than 60% of the year’s funding, which was driven by the Software and Systems segments. 

For the full report please contact John Rotchford, Managing Director, Strategic Advisory Services International, at john@sasillc.com.