Deals

CDC Closes Saratoga Acquisition

CDC Software has closed on its acquisition of CRM vendorSaratoga Systems. The company’s US$25 million annual revenue is expected to be accretive to CDC immediately upon completion of the deal.

Other than that, it will be business as usual for Saratoga and its customers, according to Bruce McIntyre, general manager for Saratoga CRM, CDC Software. The company will continue to develop, service and, of course, market its vertical CRM applications in the chemicals, consumer products, energy, insurance and selected manufacturing industries.

As for CDC’s other CRM holding — namely Pivotal — customers can expect the twain to never meet.

Different Strokes

“Both product lines are very distinct,” McIntyre told CRM Buyer, “with expertise in separate industries.”

Pivotal, for instance, has established a brand name and presence in the home building, medical device and financial services industries.

“It doesn’t make sense to stop development of either product and integrate them,” explained McIntyre.

The same is true for other products in CDC’s suite — a now impressive array of acquisitions that includes Respond, a customer complaint and feedback management application; the c360 CRM add-on products; industry applications and development tools for the Microsoft Dynamics CRM platform; Ross ERP (enterprise resource planning) and SCM (supply chain management); MVI real-time performance management; IMI warehouse management and order management; and Platinum China HR (human resources).

“Our acquisition of Saratoga will represent another logical step in our strategy as vertical industry specialists,” stated Eric Musser, president of CDC Software.

“Unlike the slash-and-burn approach of typical consolidators, we believe we are creating real value by expanding the breadth of our industry applications through investments in organic innovation, as well as targeted acquisitions such as this one,” he added.

Fusion Model

Not long ago, there were serious doubts as to whether the buy-and-hold acquisition model would work. It was thought that an acquisition had to be integrated somehow in the flagship product — if not natively in a future release, then immediately in a overlay solution — for the deal to make sense to customers and shareholders. That view still prevails in some quarters.

In fact, that has been Oracle’s approach with its numerous applications, Yankee Group analyst Sheryl Kingstone told CRM Buyer.

“For large enterprises, it may be that integration is the key to a healthy ROI (return on investment),” she pointed out, noting that Oracle is finding the road to fusion more expensive than it might have originally anticipated.

The Middle Way

The middle market has its own distinct needs, Kingstone added, which appear to be well served by the number of private equity plays in the space over the last two years.

Last year, for instance, M2M Holdings — a private equity firm jointly owned by Battery Ventures and Thoma Cressey Equity Partners — acquired Pivotal rival Onyx, which had declined repeatedly to be acquired by CDC. M2M also acquired CRM provider Knova Software in an all cash transaction valued at approximately $47 million.

Also last year, private equity heavyweight The Carlyle Group and Providence Equity Partners jointly acquired Open Solutions in a transaction valued at over $1.3 billion.

“Private equity companies like CDC and M2M Holdings are injecting much needed liquidity into the market,” Kingstone concluded.

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