Authoria acquired by private equity firm (official press release).
Please don't say it is so. Authoria sold out to a private equity firm? I thought things were going so well?
But apparently not - more than $100 million had been pumped into Authoria and the private equity firm acquired them for about $63 million.
What does the management of Authoria have to say about this?
Nothing. At least not in the official press announcing the acquisition where the only quote is from a Bedford representative and it's more about what the acquisition will do for the private equity firm that what it means to Authoria and their customers (I thought this was very interesting and may be telling of who's now running things over at Authoria):
"Today's investment of more than $70 million to acquire and propel Authoria, the only fully integrated talent management solution built on a single platform, positions Bedford Funding squarely in a fast-growing market that is not yet deeply penetrated," said Charles S. Jones, Managing Partner of Bedford Funding. There is no way anyone can consider Authoria a "winner" in this deal. Unless by "winner" you mean it's better than declaring bankruptcy.
Whether it was a recapitalization, merger, acquisition or bail out I don't like it (and I don't know - am not privy to the details of this deal but one has to assume Authoria management is doing what they believe is in the best interest of stakeholders).
But something is not right.
This is not good news for Authoria and frankly, it's not welcome news for the broader human capital marketplace. What does this say about our marketplace when even after $100 million and 10+ years one of the leading human capital software vendors still can't stand on its own two feet and needed another investor to keep them afloat? And the acquiring company in this case is not even another HR vendor eyeing synergies but a private equity firm. And they picked Authoria up for about 63 cents on the dollar.
No, not good news.
Am I surprised?
I don't think Authoria management had a choice considering an IPO was out of the question. I discussed this and other matters regarding Authoria exactly one year ago today in my blog post titled Authoria. How Much Money Does it Take? where I questioned what Authoria was doing with their capital. I think you'll find it an interesting read.
Sometimes, companies get too big, too fat, too fast on borrowed money. Look for a lot of other HR vendors who are unprofitable to be looking for similar deals the next 12-18 months as access to capital gets harder.
On the flip side, there will be lots of opportunities for profitable and/or financially stable HR vendors (many who are smaller firms with no debt and positive cash flow) to make some serious gains in market share the next several years. And kudos to them - these are well managed HR firms with quality products that deserve more attention and respect than our industry gives them.
On a related note, the HRmarketer Services Group is sponsoring a very timely webcast next week titled The Changing Value of Your Company: How to Value and Sell Your HR Business (webcast - October 9th) that I suggest anyone interested in valuations of HR businesses attend.
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Labels: Authoria, M A, merger and acquisition news, private equity