Anatomy of a Battery Ventures Deal

Late last week, Lawson Software (LWSN) announced it would pay $160 million to buy Healthvision Solutions, a healthcare software maker owned by parent Quovadx Holdings and backed by venture-capital firm Battery Ventures. While the companies aren’t well known and the sums involved aren’t huge, the deal exemplifies how some venture capitalists are profiting by deviating from investing in young companies and instead doing buyout-type deals with more mature companies.

In this case, venture firm Battery has been making a push into more later-stage buyout-type deals for the past several years. At first glance, however, its return from pursuing this strategy with Healthvision doesn’t look so stellar. Battery originally took then publicly-traded Quovadx (later rebranded as Healthvision) private in 2007 for $136.7 million. Against that number, a $160 million sale yields barely any profit at all.

But Battery partner Dave Tabors says there’s more to the deal than that. He says Battery garnered about a 3.5 times return on its investment in Quovadx/Healthvision in less than three years.

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