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August 27, 2012
Transaction Analysis
IBM to Acquire Kenexa Corp.

Financial Overview:

  • Transaction Value: $1.26 billion
  • Transaction Structure: Cash
  • Implied Enterprise Value: $1.20 billion
  • EV/ LTM Revenue: 3.8x
  • EV/ LTM EBITDA: 45.2x

 martinwolf Analysis:


  • IBM (NYSE:IBM) announced that it would acquire Kenexa Corp. (NYSE:KNXA) in a deal worth $46 per share of Kenexa, for a total of $1.26 billion in cash.
  • Kenexa has been growing rapidly both organically and inorganically, with seven previous deals in the past three years that added talent management capabilities in software, services and exchanges across multiple regions.
  • This deal represents a significant move into the Human Capital Management (HCM) space, (particularly on the talent management side) for IBM, and follows major acquisitions in the space such as SAP's 2011 purchase of SuccessFactors, Inc. for $3.8 billion and Oracle's 2012 purchase of Taleo for $1.9 billion. 
  • This deal allows IBM to further embed with its clients, and places it further into a space where it competes with Oracle and SAP's newly acquired SaaS-based Talent Management businesses.
  • This deal emphasizes that the best buyer is the one that can do the most with your asset going forward - and while Kenexa has been struggling to make money on its own, it offers IBM new capabilities. The press release states that the deal "bolsters IBM's leadership in helping clients embrace social business capabilities while gaining actionable insights from the enormous streams of information gathered from social networks every day."
  • This is another deal in a series of acquisitions for IBM, which acquired eight other companies in the first half of 2012 at a total cost of $2.2 billion.
  • martinwolf previously profiled Kenexa as one of the Top 20 Saas Companies of 2011, along with Convio, Inc., RightNow Technologies, Inc., DemandTec, Inc, SuccessFactors, Inc. and Taleo Corp., all of which have been acquired.

Please click here to read the press release.


Source: CapitalIQ


martinwolf was not the adviser in this transaction.


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With offices in San Francisco and Bangalore, India, 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 115 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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Please click here to view the announcement.   


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