John Rotchford, founder of SASI, a boutique investment banking firm, discusses how to prepare your company for sale, how buyers will value your business, and how to achieve a favorable and timely outcome.
Storage M&A Highlights:
The first half of 2018 had 19 deals totaling $853M with a median deal size of $47.5M and a 5.7x average price to revenue multiple. The three largest deals in the first half of 2018 were:
- Microsoft’s $250M acquisition of NAS provider Avere Systems with a healthy Price/Revenue multiple of 12.5x
- HPE’s $190M acquisition of Plexxi, hyperconverged network software provider with a 9.5x Price/Revenue multiple
- Carbonite’s $145.8M acquisition of Mozy which provides online data and computer backup SaaS
Nutanix gets busy on the M&A front picking up Netsil and Minjar Cloud Solutions while DDN picks up the Lustre File System business from Intel. The cloud migration software sector sees further consolidation with Google picking up Velostrata and VMware acquiring CloudVelox. In a bold move, SMART Global enters the HPC systems business with the acquisition of Penguin Computing. We are also seeing additional late stage private companies catching the M&A bug with Druva, Rubrik, and Veeam all inking deals in the first half of 2018.
Storage Venture Funding Highlights:
- Venture funding for the first half of 2018 reached $643M, driven by a strong Q2 led by Cohesity ($250M) and Qumulo ($93M). The amount raised is slightly up from the $627M raised in the first half of 2017.
- Other notable rounds include object storage software player Scality raising $60M and Rstor, an early stage, Cisco backed start-up raising $45M in its 1st round of funding. In the object storage space, Cloudian also raised $25M in it’s 5th round of funding.
- With the continual movement to cloud models and software defined XYZ, it is again surprising to see 62% of the funding or $401M going into storage systems start-ups. By contrast, only 6% or $40M went into SaaS start-ups.
- Late stage rounds dominated the first half of 2018 with 71% of total funding or $458M
For the full report, please contact John Rotchford, Managing Director, Strategic Advisory Services International at email@example.com.
- The number of rounds dropped to 34 but the total funding jumped up to roughly $1.1B for 2017, driven by later stage funding across a range of product segments.
- Rubrik led the pack taking in $180M back in May followed by Infinidat with a $95M 3rd round of funding in October.
- With the constant drum beat of software-defined- “everything” and the continual movement to the cloud, it was surprising to see Systems lead the venture product segment split for 2017 with 53% of all funding.
- While certainly much of the core IP in these start-ups is software, they have chosen business models incorporating hardware.
- We believe this is driven by customer demands for products that can be easily installed, configured and managed.
- Software margins of 80% are attractive to investors but for enterprise customers, manageability, scale and reliability matter and it’s tough to get there without tight hardware integration.
For the full report, contact John Rotchford, Managing Partner, at firstname.lastname@example.org