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MergerTech Intelligence Report, #XI: Enterprise Software Firms Now Serious Mobile Buyers
SAP Double’s Down on Mobile Enterprise Software
Since 2009, exponential growth in consumer demand for smart mobile devices has been
fueled by an increasing number of computing, leisure, management, and commercial
tasks enabled by mobile applications. As the application ecosystem matures and
diversifies with the proliferation and increasing use of smart devices, developers have
prioritized initiatives to strengthen mobile enterprise application platforms (MEAP).
While business software developers have traditionally concentrated on building a
customer base around enterprise level organizations that have a large conventional
computing superstructure, SAP is moving forward with an assertive play into mobile
software development, seizing upon an emerging business climate where more
professionals are seeking to access and interact with business information via mobile and
tablet devices.
SAP AG Acquires Syclo LLC
Transaction Value:
Undisclosed
Transaction Structure:
Undisclosed
SAP AG announced on April 10, 2012 its intention to buy Syclo LLC, one of the largest enterprise
mobile app developers and a market leader in mobile asset management, for an undisclosed
sum. Closing is expected towards the end of Q2 this year and will see Syclo’s operations and
management team integrated with SAP’s enterprise mobility management platform ‘SAP
Afaria.’
This week SAP revealed new partnerships with mobile app development vendors Sencha,
Appcelerator, and Adobe PhoneGap, designed to stimulate its partner network to develop
third-party apps. This is SAP’s third major mobile acquisition after purchasing SkyData Systems
in 2009 and Sybase in 2010, its second largest acquisition ever for an impressive $5.8B. The
Syclo deal is an aggressive double-down by SAP as it positions itself as a leader in developing
enterprise mobility capabilities and services.
Acquisition Rationale:

SAP invested heavily in Sybase to acquire its SDK, talent, MEAP, and domain expertise,
but Sybase lacked a significant number of ready-to-deploy applications. Syclo already
offered many highly regarded in-use enterprise mobile apps in a wide set of industry
verticals such as energy, CRM, asset management, and retail. Syclo will not only
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


provide SAP with an extensive library of mobile applications, but a considerable
number of enterprise customer accounts and strong mobile talent.
Leveraging Syclo’s particular expertise in field services mobility applications will allow
SAP to offer a more robust solution package to complement and extend its ERP, SCM,
and CRM offerings.
With project-based app development seeing increasing competition from
commoditized applications, SAP will be able to offer preconfigured off-the-shelf
mobile applications to its over 100,000 and growing SME client base.
Syclo will provide SAP with strong expertise in mobile strategy, application consulting,
and critically, success in monetizing technology through successful product delivery.
Mobile War?
Interestingly Oracle, SAP’s main competitor, has thus far stood aloof while SAP is betting big on
mobile enterprise software. SAP also announced this week a $155M fund to spur development
of applications compatible with its HANA platform, and a $337M incentive program for
customers to switch to SAP HANA. Potentially, improved database and analytics capabilities
leading to enhanced big data mobile applications can lure a significant number of customer
accounts away from Oracle, still the leader in the $22B database market.
SAP is not the only major enterprise software firm looking to build a cache of mobile assets
which consumerize IT processes. Recognizing the need to have a robust mobile strategy which
supports multiple platforms, IBM acquired the Israeli MEAP firm Worklight in January of this
year. Like Syclo, Worklight offered strong mobile strategy consulting and an existing library of
consumer and enterprise apps accessible on multiple platforms. IBM is now in a position to
offer a mobile development platform that will let enterprise clients develop hybrid apps
compatible with IBM’s other enterprise software.
Oracle and other enterprise software firms like Adobe and Microsoft are unlikely to sit back and
let rivals like SAP and IBM eat their lunch; markets can expect large and medium enterprise
software firms (as well as other global technology companies) to enter the MEAP M&A market
with gusto, creating a robust market for attractive mobile assets.
Three Key Implications for Other MEAP Firms


Diversification: Vendors who have traditionally concentrated on bespoke and projectbased application development will begin to offer more over-the-counter and
readymade applications. Buyers such as IBM and Adobe have already demonstrated
preference for vendors with a hybrid approach.
New Product Lines: As consumer adoption of smart devices grows, there will be demand
for field services applications in non-traditional industry verticals such as energy,
government, education, and financial services. As this trend grows, buyers will place a
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
higher premium on firms which have strong domain expertise in mobile strategy and
consulting.
Customer Expansion: As the number of over-the-counter enterprise applications grow,
more and more SMEs and emerging market players will become consumers of
enterprise mobile apps. Capitalizing on this demographic will be key to ensuring
profitability and organic growth for software providers.
MEAP M&A Market Trends
MergerTech’s Mobile IT practice has identified a number of transactions in the Mobile
Enterprise vertical by global software and consulting entities. Median multiples paid on targets
trailing twelve months revenue exceed 7.5x, while transaction values range from sub $20M to
over $5.5B. We anticipate targeted acquisitions to continue through 2012 as the demand for
cohesive enterprise mobile application solutions and strategies continues.
(Dollars in millions)
Announced
Acquirer
Target
Target Summary
Target
TTM* Rev.
TEV*
TEV/
TTM Rev.
Mobile Enterprise Application Transactions
04/10/12
SAP AG
Syclo LLC
Syclo provides mobile work order, service, inventory, and IT asset
management software that extracts data from enterprise ERP systems
for businesses and government agencies. Syclo also provides mobile
application development software.
na
na
02/22/12
Isobar North America,
Inc. (a division of Aegis
Group)
Roundarch, Inc.
Roundarch designs and develops websites, web and mobile $
applications, social media applications, and digital marketing campaigns.
62.8
7.7
01/31/12
International Business
Machines Corporation
WorkLight Ltd.
Worklight provides cross-platform smart phone and web application
development software for businesses in a range of sectors.
70.0
5.0
14.0
04/20/10
SAP America, Inc.
Sybase, Inc.
Sybase provides data management, data integration, database, mobile
middleware, RFID, general embedded and data transmission software to
enterprises.
5,800.0
1,197.0
4.8
05/25/09
SAP AG
SkyData Systems, Inc.
SkyData Systems provides out-of-the-box, collaborative, integrated
mobile applications that deliver quick-click access to vital business
data from emails, voice calls, text messages and calendar events.
na
na
na
12/11/08
Research In Motion
Limited
Chalk Media Corp.
Chalk Media Group provides software for the creation, deployment,
management, and tracking of mobile and computer-based content.
19.5
1.7
11.2
12/10/06
Trimble Navigation
Limited
@Road, Inc.
(nka:Trimble Mobile
Resource Management)
Road Inc Provides mobile resource and mobile workforce management
software to enterprises.
501.2
100.4
5.0
Mean
na
273.4
8.6
62.8
7.7
High
5,800.0
1,197.0
14.0
Low
19.5
1.7
4.8
352.1
56.1
8.0
Mean excl High and Low
1,375.1
$
485.0
Median
$
485.0
$
x
x
Deal metrics obtained from S&P Capital IQ & 451 Group
* TEV = total enterprise value; TTM = trailing twelve months
About MergerTech:
MergerTech’s mission is to enable medium-sized technology companies to realize the value of
their business. As the only investment banking firm exclusively focused on this space, we apply
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our deep domain expertise and global knowledge of buyers to deliver three key values: fast
introduction to buyers, best terms and value, and greatest certainty of deal closure.
To learn more about the Technology M&A landscape please contact Ash Sethi at 925.380.2764
or via email to asethi@mergertech.com.
4000 Executive Parkway Suite 515 San Ramon California 94583 925.380.2370
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