Embarcadero buy CodeGear

I've just learned that Embarcadero are planning on buying CodeGear, the Borland division that's responsible for their developer tools (but not the more enterprisey application lifecycle management stuff). They're paying $23m.

Embarcadero currently have revenues of $60m but expect the merged companies to have revenues of $100m. So they're buying annual revenues of $40 for $23m. That's an interesting multiple.

Earlier this month, Thoma Cressey Bravo, the private equity firm that owns Embarcadero, agreed to buy InstallShield and FlexNet from Macrovision for $200m and form a new company called Acresso. Given Thoma Cressey Bravo's stated aim of 'creating value through the strategic use of acquisitions to accelerate business growth' I wouldn't be surprised if Acresso buys Embarcadero, or vice versa, some time soon.

It's a business model that I find a bit fishy. If I thought that Thoma Cressey Bravo's plan was to heave CodeGear back to greatness then I'd think differently. But I suspect that they're more interested in the quick buck. They're taking slightly shabby, flabby companies that are stumbling into decline and gluing them together, hoping they'll stick long enough for a 12-month increase in sales followed by a re-float or trade sale and an enormous profit. It's like taking an apple, an orange and a banana, banging them together and calling it a fruit salad.

What do you think of the acquisition? What does it mean for CodeGear? Post here ...

[Disclosure: Embarcadero are theoretically a competitor of Red Gate, but our paths don't cross much]

Subscribe to the RSS feed

Comments

[Bob Cramblitt]

It's hard to get excited about a deal whose benefits are solely financial for the acquiring company. I imagine there will be a lot of people out of work, either sooner or later. Where's the value to customers?

[JD]

The company, for whom I am contracting currently, uses Embarcadero Rapid SQL. It's one of the ugliest product I have ever used.

They recently upgraded RapidSQL to have 'modern' look and feel and see what they did. They kept all existing Win3.1 icons and upgraded to Office 2003's blue ingredients. I can't stand to look at it but I have no choice but to use it.

See it for yourself.

http://img369.imageshack.us/my.php?image=rapidsqlqm2.png

If Embarcadero can do this for their flagship product, it gives me shudders to imagine what they will do with CodeGear.

[Greg Keller]

Interesting post. But first: My wife makes a KILLER salad with apples, oranges, bananas, kiwi and some other delicious stuff. I’d call that an awesome set of required ingredients for a fruit salad. Ha! Just kidding….

To the deal: What I can tell you simply is that both of these ‘entities’ (e.g. CodeGear and the traditional crew here at Embarcadero) are extremely happy. The deal for both of us was game changing and we both see an incredible opportunity at our feet to create an entirely new company to be a provider of productivity tooling independent to, yet still deeply specialized in, various platforms and languages ranging from Java to C++ to Delphi to Ruby on Rails…on through the depths of Oracle, Sybase, SQL Server, MySQL and so on.

Having worked with TCB to go private and now having gone through this extensive due diligence with them on opportunities like CodeGear and others, the goal is certainly and obviously growth. They have a financial portfolio and investors to tend to. But they grow these opportunities through substantial (re)investment in their acquired entities. There are reasons why we grew (post privatization) a lab in Romania from 0 to 100+ employees: So we could build more great product. And TCB helped us model, forecast and push the growth of those heads to do so. There’s also a reason why CodeGear is so substantial to our growth: it provides limitless new resources with some of the best engineering talent and vision in the business….all to create interesting integration points to solve productivity needs through appropriate tooling for the design, development, optimization and management of applications…from the GUI (ASP, Delphi, Java, C++) to the middle tier code (Java, C++ iSeries) straight on through to the persistence in a relational database (Oracle, SQL Server, Sybase, MySQL, etc). So look at CodeGear and all its intellectual assets as equally important as their rich products and their 3.2 million loyal end-users.

TCB leaves the strategy up to us. They depend upon us as an anchor-tenant of this software portfolio to guide them to opportunities for growth as much as they help advise us financially with a considerable war chest of funds and talent to help us execute. The deal, yes, was a good one. While I cannot explain why Borland may have had difficulties selling this division in the past, I can only speak to the our deal and the here/now. I don’t care if you are buying a car, a house *or* a software company. This is by all definitions a buyer’s market. The debt and lending markets themselves as you know are precarious so the ability to secure funding and drive it through to spend is tough and sellers are cognizant of this in this period. This could all change and we all hope it does for our economy, but the timing of the deal during this period was prime for a buyer in this market scenario and on this particular deal.

All this said, you introduced some thought provoking and interesting commentary. I hope I’ve been able to truly provide a lens into the exciting news and as always, contact me for any other questions.

All my best,

Greg Keller
Vice President-Product Management
Embarcadero Technologies, Inc.

[Nick Hodges]

My take on it? I'm "totally juiced up"

http://blogs.codegear.com/nickhodges/2008/05/07/39058

Nick Hodges
Delphi Product Manager
CodeGear

[Neil Davidson]

Greg / Nick,

Thank you for the comments. I hope you succeed in this, I really do. I think CodeGear's decline has been tragic and if you can fix that then I will salute you. And I wish you good luck with Embarcadero too - maybe you disagree with me, but I think this is a potentially great company which has stagnated for several years.

Let's give it a year. If I'm wrong, and if this hasn't been a quick flip and if Embarcadero doesn't end up as part of a hastily prepared fruit salad then I'll admit I'm wrong.

All the best,

Neil

[Allen Bauer]

Neil,

I've been with Borland (then CodeGear) for over 16 years. I started as an entry level engineer on the then Turbo Pascal dev team. I also remember back in the early hey-day of Delphi sitting around with the other members of the team (Anders Hejlsberg, Chuck Jazdzewski, Gary Whizin, etc..) all waxing poetically about how it would be great to someday take Delphi and all the dev tools and spin them out either as a stand-alone business, or as part of an entity that would truly leverage their value and assets. That "dream" is coming true.

Allen Bauer.
CodeGear Chief Scientist
http://blogs.codegear.com/abauer

[Neil Davidson]

Allen,

Thank you for the reply. If this does fulfil your dream, and if CodeGear finally gets the resources and attention that it deserves, then that will make me very happy. Perhaps we'll even get a Delphi native 64 bit compiler?

Until I see CodeGear's future as a dev tool company unfold then I'm going to remain sceptical.

- Neil

[Andy Brice]

Poor old Delphi, pushed from one uncaring parent to another, like a ginger step-child. Will the misery never end?

The fact that Embarcadero bought a stinker like InstallShield doesn't bode well for the whole venture.

>http://img369.imageshack.us/my.php?image=rapidsqlqm2.png

My eyes!!!!

[Peter Yeoh]

>> Perhaps we'll even get a Delphi native 64 bit compiler?

Now, why would you mention that? :)

It's WIP:
http://dn.codegear.com/article/36620

(And no, it does not include an IA-64 native code compiler)

>> Poor old Delphi, pushed from one uncaring parent to another, like a ginger step-child. Will the misery never end?

Sorry, but IIRC, it was Borland, then Inprise (aka Borland), then Borland, then CodeGear (as a subsidiary of Borland). That's legally still only one parent over 13 years, no?

[Brandon]

The simple fact is this: things couldn't be any worse for Delphi than they were with Borland -- a company that obviously did not believe in the product.

[RA]

Correct me if I'm wrong, but didn't Microsoft invest millions into Borland when it needed the money?

Shortly after the infusion of Microsoft money, wasn't the decision made to turn away from Delphi's native win32 roots and go all out on .NET? Remember the infamous Delphi 8?

And wasn't Delphi 8 going 100% .NET (among other reasons) what drove many long-time Delphi developers away in disgust because their needs were totally ignored in their eyes?

Fast forward to 2007-2008. Codegear gave hope to now-skeptical and cynical Delphi developers that things were turning around. And Delphi 2007 is good enough for Delphi 7 users to consider (IMHO).

Not only that, the Codegear appears to be listening to the customers and prioritizing features based on feedback.

And then...bam! The CEO running Codegear is replaced and uncertainty is reintroduced. At a time when the name "Codegear" started to mean something VERY positive compared to "Borland".

And now, unsurprisingly, Codegear is sold.

Only time will tell if Embarcadero makes similar mistakes that Borland made.

Early warning signs to watch: Beware if Embarcadero decides to rename "Codegear" with something that has zero brand recognition--and watch out especially if the new name contains more syllables than two, or is longer to type, or is harder to spell/pronounce.

Granted, I thought naming Borland as Inprise was hard to beat as a branding mistake until I saw "Delphi for PHP"--one of the most idiotic/confusing product naming decisions I've seen in my life.

[Pete]

The key advantage Delphi and Codegear in general has is this. You can compile Native. You can avoid the whole .NET mess. I dislike .NET, and I don't believe it has a real future. I've even read interesting, if slightly consperital in nature, articles on how the whole .NET thing will be dropped by MS.

Microsoft have really screwed up lately, Vista, .NET, Yahoo... NOW is the time for other companies to strike. Apple, Google, ASUS - have made some excellent hits on MS - now it is Codegear's turn to recapture the development market...

[rocky]

This is an awsome article. Very basic but extermely effective movements to build a great body.
knightsbridge business sales--knightsbridge business sales