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]
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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.
Posted by: RA | May 12, 2008 at 10:30 PM
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...
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