2i’s Deal of the Week: Open Text Acquires Vizible

We highlight Open Text’s announced acquisition of Vizible last week for two reasons . . .

Open Text is the second largest Enterprise Content Management (ECM) software provider with 16% global market share. The company trails IBM, which has 24.9% market share, and leads EMC / Documentum with 13.6% market share. The balance of the market — not an insignificant portion at 45.5% share – is composed of a number of other players. According to Wikipedia, these include Interwoven, Hyland Software, WAVE Corporation, Ever Team, Objective Corporation, ColumbiaSoft, Xythos, and open source options supplied by Nuxeo, Knowledge Tree and Alfresco, along with an SaaS option from Spring CM. Rather than directly challenging IBM for top position by acquiring ECM firms that have traditional capabilities (access, version control, regulatory features, etc.) and customer bases, Open Text purchased Vizible to own its protected IP.

Vizible has developed and patented a visual and interactive technology platform for the transformation of content into 3D experiences on the Internet. The platform enables Web users to personalize and engage with video, images, music, Web pages, and personal or Web content. The technology will likely give Open Text with some edge to appeal to organizations seeking an entre’ into social and rich media opportunities with a name brand firm.

Vizible’s patents can be reviewed here.

We highlight this as the deal of the week because it illustrates a few key trends:

• Social Media going corporate? – While many traditional enterprise software and IT firms privately scoff at social media (“those firms will never make any money”), some large companies are positioning themselves for a wave of media consumption changes even at enterprise level customers.

• Goliaths do buy Davids! – The acquisition is clearly technology driven. The size differential of these firms is staggering.  Open  Text has roughly 3,000 employees and $750M in annual revenues, while the not so visible Vizible has a mere 15 employees.  Even for regular acquirers like Open Text, this is a move from the typical practice.  Large publicly traded companies typically seek opportunities that will move the revenue “needle” more than just a rounding error.  Perhaps the power and inevitability of social media is getting through to the financial wizards as well.

Vizible is a private company, and therefore very little deal or valuation information was disclosed. Open Text has not provided information in its latest 10-Q filing on the acquisition. We hope to sift through the public data in later filings to examine Vizible’s key metrics and possible valuation. Stay tuned.

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Filed Under Deal of the Week, Intellectual Property, Internet Trends & Drivers, Merger & Acquisitions