M&A Alert—February 1, 2012
IBM Acquires Worklight
Transaction Size: $70mm
Worklight offers HTML5 mobile application development and management platform which allows organizations to develop and deliver HTML5-based native applications that can be integrated with existing enterprise IT systems. Companies use Worklight so they can integrate security features, data management and analytics in the mobile applications. Worklight enables companies to reduce time to market, efficiently manage devices and minimize cost and complexity when offering mobile applications that promote better customer and employee user experiences across devices. For example, a bank can create a single application that offers features to enable its customers to securely connect to their account, pay bills and manage their investments, regardless of the device they are using. A hospital could use Worklight technology to extend its existing IT system to allow direct input of health history, allergies, and prescriptions by a patient using a tablet. Upon acquisition, Worklight will be integrated to IBM’s Software Group. Other enterprise mobile application development companies include Appcelerator, PhoneGap (acquired by Adobe), Rhomobile (acquired by Motorola), and Sencha. Worklight was founded in 2006 and has raised $18mm in funding from Genesis Partners (Eddy Shalev), Index Ventures (Bernard Dalle) and Pitango Venture Capital (Rona Segev-Gal).
IBM provides a broad array of hardware, software and services to business customers. IBM’s software offerings span across many categories and are generally oriented toward helping large and medium-sized businesses run their businesses more efficiently. Enterprise mobile device management has been a key sector that IBM has focused on. The same day of the Worklight acquisition, IBM announced Endpoint Manager for Mobile Devices, a software platform that companies use to secure and manage employees’ smartphones, tablets and laptops. This product is based on IBM’s July 2010 acquisition, BigFix, a system and security management tool for servicing connected devices across a number of operating platforms, including laptops and point of sale hardware. The key executive sponsor of the Worklight acquisition was Marie Wieck, general manager, IBM application and infrastructure middleware.
IBM did not disclose details of the transaction but TechCrunch reported that, according to Israel publication Calcalist, the transaction value is $70mm. Update: According to Israel’s Globes, Worklight’s generated $5-$10mm revenues in 2011.
Enterprise Value (EV): $70mm
Comparable transactions in the enterprise mobile application sector include Motorola’sacquisition of Rhomobile in October 2011, Adobe’s acquisition of PhoneGap in October 2011, and Keynote’s acquisition of Device Anywhere for $45mm (4.5 times revenue) in October 2011.
Worklight expands IBM’s enterprise mobile portfolio. IBM’s goal is to enable global corporations to leverage the proliferation of mobile devices by offering a development platform that helps speed the delivery of existing and new mobile applications to multiple devices and ensures secure connections between smartphone and tablet applications with enterprise IT systems. Worklight fits in this strategy.
Architect Partners’ Observations
1) Since IBM doesn’t frequently buy early stage companies, this transaction is particularly telling of the importance global corporations and traditional IT vendors are placing on mobile.
2) Enterprise mobile application development and device management are becoming critical capabilities as companies adopt to the growing demands of an increasingly mobile workforce and customer base. The ability to bridge a myriad of devices and applications to an existing enterprise IT system is key to ensure security, analytics and, importantly, workforce and/or customer engagement.
3) We have also published an Ecosystem Thought piece on the mobile application development framework. Please click here for our research.