Marlin Equity Partners Buys a Controlling Stake in Emptoris

The news is official. Marlin Equity Partners has bought a controlling stake in Emptoris. According to the announcement, "Marlin Equity Partners has acquired a majority equity position in Emptoris, Inc. and becomes the primary investor in the company, alongside Emptoris' management and employees ... the company will retain the existing management team, led by Avner Schneur, Chief Executive Officer and founder of the company." Funding details and deal valuation numbers were not released, but based on a letter that circulated to previous shareholders and also on various conversations I've had with those privy to some of the details, it appears that MEP's investment was in the $25 million range. According to my sources, the deal wipes out many or all of the common shareholders who will receive nothing upfront. Based on what multiple sources had to say, I've heard that this group was not consulted in the funding process (and learned about the deal after it was negotiated).

While it is hard to assign a specific multiple to the deal because MEP assumed Emptoris' liabilities from the Ariba lawsuit, it looks on the surface as if the deal was done at less than a 1x revenue multiple. What are the reasons for this low valuation? Stay tuned for further analysis further in the coming days, but at this point I'd speculate that the Ariba liability played a large part, not to mention the general capital market conditions which are about as bad as they’ve ever been. It's also worth noting that based on multiple discussions that I've had with Boston/128-area investors over the years, that Emptoris' CEO, Avner Schneur, has not endeared himself to at least some individuals in the local venture community. Whether this played a role or not is unclear.

I am talking to Emptoris later this morning to get their perspective and plan to share what I learn from this conversation later in the day. In the meantime, please keep your comments to this post, especially those regarding individuals, civil.

Jason Busch

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