Private equity participation in channel mergers and acquisitions in 2015 accounted for approximately 66 percent of the revenue of the 21 North American transactions identified by Martinwolf M&A Advisors, a global IT investment firm.
TIBCO Software to Acquire API Management Leader Mashery
TIBCO Software Inc., a global leader in integration, analytics, and event processing, today announced it will acquire Mashery, the industry leader in Application Programming Interface (API) management. The transaction is expected to close in the coming weeks.
Get Smart Content Adds $3.5 Million in Funding to Expand Sales
Get Smart Content, a leading multi-channel personalization platform, today announced that it has raised a round of funding worth $3.5 million. The round was led by Origin Ventures with participation by Chicago Ventures and Virgo Capital.
DiscoverOrg Acquires iProfile to Fuel Global Expansion
DiscoverOrg (http://www.discoverorg.com), the leading sales and marketing intelligence solution, has acquired iProfile, the pioneer of sales intelligence for the technology industry. The acquisition combines iProfile’s comprehensive global professional contact and sales intelligence database with DiscoverOrg’s proprietary sales intelligence and analytics.
Sayers Announces Recapitalization Led By Virgo Capital
Sayers, a leading IT solutions company in the data center infrastructure, enterprise security, and networking sectors, today announced that it closed on a recapitalization transaction led by Virgo Capital.
The Meaning of Stickiness
In our last article we talked about what high renewal rates mean for your business, but how do you set your business up to achieve those renewal rates? As we said, it comes down to customer success with your product and stickiness in the face of market changes and competitive pressures.
Let’s talk about stickiness (a term everyone seems to talk about) – just what does it really mean? A quick definition is the nature of your customers to continue to use your products or services, to “stick” with you.
The traditional (and now outdated) approach to keeping your customers sticky was to sign them up to long-term contracts or be a black box in one of their main business processes. Such an attitude could not be further from the spirit of adding value and customer success.
As we look at the stickiness of businesses today, we focus on a few key areas that drive value and make a customer successful – which leads to them to renew, upgrade, and never leave.
What’s in a Renewal Rate?
One of the key value questions for any software or services business is the rate of customer renewal. Whether it is measured in dollars, customers, subscriptions, maintenance agreements, or some other metric, higher renewal rates usually indicate better products and stickier customers, and they directly translate to more predictable revenue and lower selling costs.
Typically, good services businesses have renewal rates of more than 80%, while more sticky software renewal rates hit 90% or more. But what is the difference between a company which has a 90% renewal rate vs. one with a 95% renewal rate? Both are clearly leaders among their peers, but, as just one example, the 95% renewal rate company can spend half what the other must spend on selling and still come out ahead.
In order to get to that conclusion, we need to look at renewals from the other angle – by considering attrition. While a 90% renewal rate is great, it means that attrition is 10%. So the company with a 95% renewal rate has only 5% attrition, meaning on average it loses half as many customers per year as its rival in this example.
Software, Software Everywhere
Across almost every industry in the U.S., businesses both large and small are highly dependent on software technology to support their operations. Whether they are manufacturing a product, managing a sales force, invoicing a customer, or paying employees, more often than not software plays a major role in getting the job done. With the increasing amount of software technology, including third-party applications, databases, operating systems, websites, and propriety applications, one of the key challenges that companies face is how to manage and maintain all of this software, in many cases mission-critical software, in a cost-effective manner. For software and technology providers themselves, the increasingly competitive marketplace is making it important to not only provide a lower total cost of ownership but also be fast and efficient in improving products and expanding feature sets.
Non-Newtonian Liquid(ity)
Many investors have found it challenging to generate yield in a “low for long” interest rate environment. Not surprisingly, this topic often comes up in our casual conversations with limited partners. As a service to our constituents we decided to not only explore what has been happening in the credit markets, but also provide some ideas on where they can find yield. These learnings also help Virgo and its portfolio companies plan for strategic initiatives in 2016, such as the level of debt available to help fund add-on acquisitions. In the spirit of holiday giving, we would like to share some of these findings with our Virgo View readers.
HIMSS14 Postmortem: From Shakedown to Shakeout
Like many of those in attendance, my post-HIMSS14 recovery weekend was spent on a variety of therapeutic activities such as spending time with family, attempting to work off one too many breakfast/lunch/happy hour/dinner/reverse happy hour meetings, and flipping through a stack of special edition publications picked up at the conference (thank you FedEx!). I also had time to reflect on some of the key conference takeaways that I wanted to discuss with my colleagues this week.
