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December 5, 2011
martinwolf Transaction Analysis
SAP America, Inc. to Acquire SuccessFactors, Inc.   (NYSE: SFSF) 

Financial Overview
  • Transaction Value: $3.37B
  • Transaction Structure: Cash
  • EV/Revenue: 10.7X 
  • SAP America, Inc, operating as a subsidiary of SAP AG (DB: SAP), has signed a definitive agreement to acquire SuccessFactors, Inc (SFSF), a SaaS-based leader in performance and talent management within the larger Human Capital Management (HCM) space, for $40.00/share which represents a premium of over 50 percent above Friday's close of $26.25/share. 
  • SAP already has core human resources capabilities, and SFSF provides a best-in-class talent management component as well as a significant move towards SaaS-based software.
  • Key drivers of SFSF's valuation are the 80%+ gross margins on recurring revenue with a 45%+ revenue growth rate. Furthermore, sales, marketing and administration at SFSF represents over 60% of revenues while the customer overlap with SAP is fairly small. The synergies in SG&A savings should be significant, as well as the incremental revenue coming from cross-selling the SFSF platform with the large SAP customer base.
  • SFSF has recently been an aggressive consolidator in the space having acquired two businesses in 2011 including Plateau Systems LTD, a leading competitor, for $290M and Jambok for nearly $10M.  We expect the marketplace trend of consolidation in the HCM space to continue in 2012.
  • The market is expecting further consolidation as well with Taleo (TLEO) up 19.8%, Cornerstone OnDemand (CSOD) up 12.1%, Kenexa (KNXA) up 16.3%, Saba Software (SABA) up 12.4%, and Ultimate Software Group (ULTI) up 6.3% today on the news of the transaction.
  • Buyers in the space include names such as Oracle and Workday as these major players continue to search for ways to drive their cloud computing revenue for potential targets such as Taleo, Cornerstone on Demand, and Kenexa.
  • Business Process Outsourcing (BPO) companies in the human resources space such as IBM, Accenture, Genpact, and WNS will face a high hurdle in terms of providing a compelling offering. They will be looking at acquiring technology companies that complete the missing pieces in their technology platform offerings.
  • This will reset valuations of all other SaaS companies in the space where there was a meaningful dip in the martinwolf SaaS index after the start of the European debt crises.  See martinwolf research covered here.


Please click here to read the press release.  


martinwolf was not the adviser of this transaction. To learn more about this transaction or our firm, contact Yousif Abudra at  or (925) 215-2760.   

About martinwolf    


Based in Silicon Valley, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 100 transactions in six countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. martinwolf is a member of FINRA and SIPC. For more information, visit


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