November 12, 2009

Acquisition of Hyperion Consulting Partners Continues

Back in January, I wrote a blog posting about all the Hyperion consulting firms that got gobbled up in 2008. I fearlessly predicted more acquisitions in 2009... and there were none of note for over 9 months. The last month has seen two acquisitions.

October 16: Prithvi Buys Percentix
Prithvi Information Solutions bought Southern California-based Percentix on October 16. If you're outside of SoCal or Colorado, you may have never heard of Percentix. They only had 10-20 employees, but they were developing a reputation out West. Prithvi, a major India-based IT services firm with sales in excess of $250 million, bought Percentix for an undisclosed amount.

This was definitely a stealth purchase. There were no press releases that I could find and Percentix's own website doesn't even mention that they were acquired. The only place I could find it mentioned officially was on LinkedIn. Look in the top-right corner for the new "Parent Company" information:

Why would a $250MM company bother buying a company with 10+ employees? I honestly have no idea. Feel free to speculate in the comments.

November 10: Hackett Buys Archstone
Per Archstone, Archstone has been implementing Hyperion since at least 2004. I first ran into them at Solutions 2007 at a presentation they were giving with CVS (I think), but their website claims they have a significant number of HFM and Planning implementations dating back 5+ years. Archstone even has a press release on their website saying that they were Hyperion's "Partner of the Year" in 2007, but since the press release also says that Hyperion is based out of the Netherlands, I don't put a ton of faith in it:

What's definite is that Archstone is a well-known player in the Hyperion space that's fallen on hard times as of late. At their peak in 2007, they had over 250 employees and revenue of close to $70MM. Now Archstone is around 130 consultants with revenues of about $35-40MM per Hackett's press release on the acquisition.

There are two very interesting things about this acquisition. First, Archstone didn't get very much for their company. It seems to be an all stock deal valued (depending on who you talk to) between $13.5 and $23MM. That's about 50% of one year's revenue which is what we in the USA call a "fire sale." Considering that EPM is a hot place to be right now, Hackett seems to have gotten an amazing deal.

What really puzzles me is that I can't believe Hackett is in a position to buy anyone at the moment. The same day that they announced the Archstone acquisition, they also announced that they missed their earnings and revenue expectations for Q3. Revenue was off 33% from a year earlier and net income was down over 80%. Further, Hackett forecasted a weak fourth quarter. Hackett stock (NASDAQ: HCKT) was at $3.76/share on Tuesday. At the time of this writing, Hackett stock is below $3.00/share. In other words, this doesn't seem like a good time for Hackett to be buying anybody. Get your house in order before you decide to take on someone else's housecleaning too.

What's Next
A lot of the acquisitions in 2008 were by companies looking to acquire an EPM partner to get into new customers. Neither of the acquisitions above seems to fit that mold. This begs the question: are there other Hyperion partners out there that are hurting? Considering that the EPM space is doing quite well, while there may be one or two more troubled firms out there, I just don't see a lot more fire sale type deals anytime soon.

However, I do still foresee more acquisitions in the next few months. As for who will be acquired, I'll quote my own posting from January:
...there aren't a ton of pure-EPM partners left. One could speculate that it might be interRel, PII, Kerdock, Global Analytics, US-Analytics, Analytic Vision, HCG, TopDown, or even the Hyperion arm of Palladium, but it could just as likely be some other tiny Hyperion vendor that's not on anyone's radar screen right now.
Well, Percentix definitely fell into the "tiny Hyperion vendor" category, but I would still look to one of those companies (other than interRel) I listed in January to be acquired next. Personally, I hope that either Global Analytics, US-Analytics, Analytic Vision, or Analytica (out of the UK) get bought simply because the Hyperion world could use fewer consulting companies with "analytic" in their names. Next time, try to be a little more creative, people.


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Anonymous said...

I'm not sure how prithvi can stealthily aquire ! its a listed company i india !!

if they have not declared it, they are asking for trouble.


Indra Bangsawan said...

I guess your prediction is in the right direction. Just found out another hyperion consulting partner (Paragonbpm) being acquired by PwC LLP in November 2009. about Interrel?