New Friends! Salesforce Confirms Buddy Media Deal.
A press release from the enterprise software company says it has a deal to buy the five-year-old social media marketing company for $689 million in cash and stock. My earlier report said the two companies had a deal that valued Buddy Media at more than $800 million.
I suspect the gap in the two numbers is accounted for in this line of the release: “All of Buddy Media’s vested and unvested options, restricted stock and restricted stock units held by continuing employees will be assumed and converted into options, restricted stock and restricted stock units of salesforce.com.”
There’s no reference to the value of those options and stock units, but my hunch is that if you take them and whatever cash Buddy Media had in the bank (it had raised $90 million, and presumably had a bunch of it left), plus any earnout/employee retention funds, you’ll get north of $800 million. Buddy Media’s last funding round in 2011 valued the company at $500 million.
(Update: Salesforce has already started bumping up the official price: Its 8-K filed this morning lists the “total consideration” for Buddy Media at $745 million; it also refers to the employee retention program but I can’t see a dollar value listed there. Update 2: A Facebook post from Buddy Media CEO Mike Lazerow says he sold the company for $745 million “plus cash and some other stuff.”)
There’s a conference call at 8:30 am ET today, so maybe we’ll get a bit more clarity then.
Two other notes for now:
- The deal is scheduled to close at the end of October.
- Salesforce says the deal will boost its revenues for the second half of its 2013 fiscal year, which ends January 31, 2013, by $20 million to $25 million. If you assume that means Buddy Media was doing $40 million in revenue this year, that puts its acquisition price in the 34x to 40x revenue price band. Last month, Oracle announced it had purchased Vitrue, another Facebook-centric social marketing platform, at what was reportedly a much lower multiple. (Correction: Ugh. Boneheaded move by me. I was dividing Buddy Media’s purchase price by its half-year revenue, not full year revenue. Let’s try this again: On the call, Salesforce.com CEO Marc Benioff said his guidance for Buddy Media’s effect on his top line slightly understates Buddy Media’s revenue. To be conservative, let’s assume that means the company is going to do $40 million in revenue this year. Using the SEC-reported $745 million purchase price, that puts the deal at a 19x revenue multiple. If you’re more generous, and assume a $50 million year, that gets you down to 15x.)
I’ll add more details if I get them.
And here’s a video from Lazerow, which he shot after the deal closed this weekend. Pretty self-explanatory and quite extraordinary. Well worth watching.