Emptoris Starts the New Year in New Hands

Earlier this week, I hinted in a post that there was some major news about to come out of Emptoris. After doing some more homework, I've been able to piece together a number of elements on what's transpired. Though I've not gotten anything confirmed as yet from the company in question, I hope to speak with them early next week in significant detail about the news. But here's what I do know, pieced together by a number of those close to -- but not employed by -- Emptoris as well as company investors. First, Emptoris had Deutsche Bank Alex. Brown investigate various sales and capital raising options during the Q4 period when it became clear that Emptoris would have some liability from the Ariba patent litigation. Second, the retained bank succeeded in creating significant interest among more than one party interested in buying Emptoris. Third, the leading bidder turned out to be a financial investor (e.g., an investment firm), not another software company.

While I hope to offer-up many more details and my initial analysis after speaking to Emptoris next week, it appears the deal was valued in the $25 million range. While this might seem low given Emptoris' revenues and competitive position in the market, I believe a valuation number at this level makes sense given how depressed the overall capital markets are not to mention the tech sector specifically. In addition, Emptoris needed potential access to capital quickly because of the litigation circumstances, which surely impacted the valuation in a negative fashion.

From a management standpoint, it appears much if not all of the current team (including Avner Schneur) will remain onboard. Based on a flurry of emails and comments I've gotten already, it would seem that at least some of the original investors will see little or none of their investment, as recent preferred stock took precedence over common or earlier preferred shares. However, I've not confirmed any of these points with Emptoris, so please treat them as merely educated speculation at this point in time. It is too early to make a call about how this deal will impact Emptoris customers. I suspect the impact will be minimal, but again, I do not have enough facts to offer a definitive opinion just yet.

Stay tuned for significantly more analysis and news as we launch into the New Year.

- Jason Busch

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