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Autonomy: acquires InterwovenJan 28, 2009 (Datamonitor via COMTEX) -- Autonomy, a leading enterprise search and retrieval company, has announced its plans to acquire Interwoven, a well-recognized enterprise content management vendor, for approximately $775 million. Through this acquisition, both companies stand to fill critical gaps in their respective portfolios, and as a combined entity, look poised to target the increasingly attractive compliance market. In early January 2009, Autonomy, a leading vendor in the enterprise search and retrieval (ESR) market, announced its intention to acquire Interwoven, one of the few remaining independent enterprise content management (ECM) vendors. While Interwoven has hardly been valued conservatively, with its total price set to be close to $775 million (or almost 1.5 times its 2008 revenue), Autonomy can well afford this acquisition. Autonomy reported a sizeable cash balance of $199.2 million at year end 2008, generated almost twice the annual revenue of Interwoven, and posted 26% net margins. In comparison, Interwoven generated net margins of about 12% in 2008, which was expected given that it operates in a much more mature market. However, the companies expect to capitalize on the economies of scale to generate synergies of approximately $40 million per annum from the first year of completion. The acquisition is also expected to enhance Autonomy's earnings by approximately 20% in 2009. From a technology standpoint, there is little doubt that Interwoven is a good fit. The move to integrate search technologies with content management is not new. ESR technologies crawl, index, and categorize unstructured content that ECM technologies manage, meaning closer collaboration between the two software areas is unavoidable. Interwoven has always been known as a leading web content management (WCM) vendor. One of the fundamental aims of WCM solutions is to make authoring and publishing easy for the knowledge worker. An easy to use, integrated, ESR solution will help content authors easily access multiple media formats across disparate repositories, encouraging content reusability and reducing duplication in efforts. This is exactly the kind of synergy the two vendors are hoping to generate. There are multiple areas in which the two vendors can collaborate. Interwoven brings along a host of capabilities that can be capitalized on by Autonomy. For starters, Autonomy can further boost its e-discovery offering with Interwoven's acquired subsidiary, Discovery Mining, an e-discovery vendor with an on-demand delivery. Interwoven paid approximately $36 million in cash to acquire Discovery Mining, and has integrated the new addition already. Interwoven will also bring 4,500 customers, a large proportion of which are law firms. According to the company, the combined organization will create a leader in legal information management with over 20,000 customers, including 1,200 top law firms. On the other hand, Interwoven's users will benefit if they receive Autonomy's industry-leading IDOL product as a part of the same deal. Datamonitor highlighted in a late 2008 assessment that, although Interwoven's WCM capabilities are best-of-breed, its documents and record management (DRM) capabilities do not measure up to market leaders EMC (including Documentum) and IBM (including Filenet). Interwoven has suffered in the past with being late to market with its DRM capabilities, which are required by organizations retaining information for compliance purposes. Autonomy's acquired solution, Meridio, could also provide Interwoven a much needed DRM push. In addition, Interwoven can capitalize on Autonomy's business process management (BPM) solution, LiquidOffice, which Autonomy acquired from Cardiff/Verity in 2005. Interwoven has so far lacked an integrated BPM solution, diluting its stand against large platform vendors that compete in the DRM market. Datamonitor believes that BPM and collaboration solutions will be seen as an inherent functionality in all major DRM solutions within the next year. Autonomy's considerable market presence in the email archiving business, from the acquisition of Zantaz in 2007, will also be an advantage to Interwoven. Finally, what will probably make this acquisition worth its premium is the shared vision of these organizations to develop the next generation of legal and compliance software. The compliance and e-discovery market, a part of the governance, risk and compliance (GRC) market, is expected to gain traction within enterprises in the medium term. Recessionary periods could just increase the adoption rate of compliance and e-discovery solutions. Understandably, cash-strapped balances and hard times could make organizations keener to avoid legal hassle and compliance investigations, and in turn, more likely to invest in GRC solutions out of fear, uncertainty, and doubt. To that end, the acquisition is timely and strategic. However, the impact and duration of the financial crisis, coupled with the speed at which the two vendors integrate solutions, will ultimately decide their placement in the information management lifecycle. Surya Mukherjee http://www.datamonitor.com Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon |