

IBM Continues Buying Spree With Algorithmics Acquisition  - rickdale
http://www.crn.com/news/applications-os/231600618/ibm-continues-buying-spree-with-algorithmics-acquisition.htm;jsessionid=oOXLWysrIVGY+PV1s-9u8w**.ecappj01

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moonlighter
IBM has been on a buying spree for years, mostly driven by Steven Mills from
their software group. They are actually very smart about it; they acquire most
companies early on when they are still comparatively cheap. They usually buy
them not because they need to for competitive pressure but to shape or build
out future offerings, avoiding having to pay a premium later on.

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mathattack
The price seems very cheap for a software firm: just over double revenue. With
risk management being so important for banks now, I am surprised. Are they
more of a consulting firm with software attached?

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phaet0n
Major US firms seemingly have a good run of acquiring smaller innovative
Canadian companies at bargain prices:
[http://www.techvibes.com/blog/2011-tech-acquisition-
tracker-...](http://www.techvibes.com/blog/2011-tech-acquisition-
tracker-18-and-counting-2011-07-08)

I think it may point to the difficulty of getting financing beyond a certain
threshold.

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mathattack
Seems like it sold at ~ 20x EBITDA and a little over 2x sales. Expensive by
the first metric; cheap by the second. Revenue is ~180k per employee - low for
an established company.

The weak EBITDA makes or tough buy for a PE firm, who might not be able to
make interest payments on the debt required for a purchase.

This is much less of an issue for IBM who would pay in cash.

I see IBM making half the employees redundant an then pushing the product
through their existing sales network.

Not a bad deal for them, though it might make Algo a tougher place to work.

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fireismyflag
Who else thought the article was about IBM using algorithms to buy in the
stock market?

