decor decor
"The opportunity is often lost by deliberating."

-Publilius Syrus

AppDynamics To Be Acquired by Cisco

Financial Information
  • Enterprise Value                          $3.9 billion
  • EV/LTM Revenue                        18.9x
Transaction Facts
  • In a surprise announcement late yesterday, Cisco Systems (Nasdaq:CSCO) revealed that it was acquiring application monitoring company AppDynamics.
  • The deal supplants AppDynamics’ plans to trade on Nasdaq under the ticker APPD. Should the IPO had occurred, it would have been the first major tech IPO of 2017.
  • At a deal price of approximately $26 per share, Cisco is paying significantly more than AppDynamics’ original price range of $10-$12 per share (and its recently revised range of $12-14 per share). It is also higher than the company’s most recent private valuation, at $1.9 billion — good news for investors, who together have put in $314 million into the company.
Last-Minute Strategy Paid Dividends
  • Low Supply, High Demand: AppDynamics had several positive factors driving its planned IPO. The company’s “unicorn” status gave it distinction and prestige, and the relative drought among tech IPOs led many investors to seek it out. Its IPO was seen as the vanguard for a series of new US listings with uncertainty leading up to the US presidential election currently resolved. As a result, the road show was reportedly well-received.
  • Prime Leverage: The timing of this process could serve as a model for other unicorns. AppDynamics was well-positioned to negotiate an offer from Cisco — its imminent IPO provided an excellent fallback position should the deal fall through and provided the leverage to resist any onerous or disagreeable terms. At the same time, the acquisition promised protection from market conditions, relief from public disclosure regulations, and in this case a significantly higher valuation.
  • Left Hand, Right Hand: According to media reports, this surprise transaction was not a result of the company running a dual process. Instead, the company hired Qatalyst Partners to run a sale separate from the the official IPO process — and was rewarded with an offer that was approximately 20 percent higher than the expected post-IPO sales price.
  • A Familiar Model: Cisco is no stranger to making big deals, especially in perceived growth areas (see its Jasper Technologies acquisition for $1.4 billion last year, which bolstered its IoT capabilities). We’ve also seen several major pre-IPO acquisitions in recent months, from December’s acquisition of Optiv by KKR to Symantec’s acquisition of Blue Coat Systems for $4.65 billion in June.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

18 Oct 2021

CDW To Acquire Sirius Computer Solutions

Financial Information ($USD) Enterprise Value: $2.5 Billion EV/REV: 1.23x Transaction Details CDW Corporation today announced it has entered into a definitive agreement to acquire Sirius Computer Solutions, Inc from an affiliate of Clayton, Dubilier & Rice for $2.5 billion in cash. Sirius, a leading provider of secure, mission-critical technology-based solutions, generated 2020 net sales of $2.04 billion with approximately 3,900...

29 Sep 2021

H.I.G. Capital Announces Sale of Trace3

Financial Information Not Disclosed Transaction Details H.I.G. Capital announced that one of its affiliates has entered into a definitive agreement to sell Trace3, a premier provider of IT solutions and services, to affiliates of American Securities. Financial terms of the transaction are not being disclosed, but the press release cites Trace3 revenue of $1.4 billion....

02 Aug 2021

TowerBrook Capital Partners Makes Strategic Investment in EisnerAmper LLP

Transaction Details TowerBrook Capital Partners, an international investment management firm, has made a strategic investment in EisnerAmper, one of the largest professional services firms in the world, offering premier accounting, tax and business advisory services. The firm will now operate two divisions: EisnerAmper LLP, a licensed CPA firm, will provide attest services; and Eisner Advisory Group LLC,...