With all the hoopla around Oracle, JDE, and PeopleSoft last week, no one seems to notice that the Tier III ERP vendor Made2Manage agreed to be bought out by an affiliate of IT venture capital firm Battery Ventures for $30m in cash. The buyout price is 35% over the current share price, a nice pop for shareholders.
M2M is a small footprint, easy to install system, with good vertical functionality for manufacturers of fabricated metals, industrial and commercial machinery, electronics, and rubber and plastics products. It is currently compliant with the Microsoft .NET framework, and a new version rewritten using Microsoft Visual Studio .NET is slated for general availability in early 2004. According to one source inside M2M, the company has been renewing its connection with its 1,600 installed base customers and has been having some success in cross-selling additional products, such as advanced planning and scheduling, CRM, financial reporting tools, and enhanced BOM functionality for reference designators in the electronics industry.
Made2Manage has been bumping along at about $30M in revenue for the past three years, with a slight loss in the fiscal year ending March 31. With cash reserves of over $16M, the company was not in immediate trouble. So why did M2M agree to the deal? One reason might be to get out from under the harsh spotlight of the public markets, which make it difficult for vendors to work beyond the results for the next quarter. Another might be Sarbanes-Oxley, which adds additional cost of compliance for publicly held companies. But the more strategic reason might be eventually to position M2M for sale to a larger enterprise system vendor. M2M might make a good acquisition for a larger vendor that is looking to offer a Microsoft-based ERP package and not have to build it from scratch. Or, it might be a good target for a CRM or SCM vendor that is looking to move into the ERP space.
The press release
is on the M2M web site.