MW Transaction Analysis
Verint Systems Acquires KANA Software
- Total Transaction Size: $514 Million
- Implied Enterprise Value (EV): $514 Million
- EV/Expected Forward Revenue: 3.4x - 3.7x
- EV/Expected Forward EBITDA: 11.4x - 12.9x
- Verint Systems (NASDAQ:VRNT), a data-analysis and security software maker, announced today that it had signed a definitive agreement to acquire KANA Software, a customer service and cloud solution provider, for $514 million.
- According to the press release, Verint expects KANA to generate non-GAAP revenue of approximately $140-150 million and non-GAAP EBITDA of $40-45 million in 2014.
- KANA Software, which is a portfolio company of Accel-KKR, was first acquired by the private equity firm in 2009 for $41 million.
- The deal will be financed by approximately $100 million of Verint's cash, $300 million from incremental term loans and the rest from Verint's revolving credit.
- Shares of Verint closed up 9.2% on news of the deal.
Adding Cloud Capabilities to Strengthen An Existing Value Proposition
- Broadening Capabilities for Providing Services: With this acquisition, Verint is moving to expand its set of capabilities into higher-growth services markets. After the acquisition, Verint's 10,000 customers (joined by KANA's 900) will be able to implement a single-vendor suite to manage their customer engagement.
- Turning to the Cloud: KANA's solutions offerings cover both on-premise support and cloud alternatives, providing new means with which Verint can reach out to its global network of customers.
- Transformation Through PE Investment: Following its acquisition by Accel-KKR, KANA grew its global presence by acquiring software companies in the customer service vertical in Ireland, the U.S., the U.K. and the Netherlands.
- Low Interest Rates Continuing to Spur M&A: Verint is only funding $100 million of the purchase price with cash, fueled by the M&A-friendly, low-interest environment.
martinwolf was not the advisor in this transaction.
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