Private equity firms took Informatica (NASDAQ: INFA) private this week in a $5.3 Billion leveraged buyout (LBO). The Motley Fool investment advisors suggest that Informatica investors sell. As Tim Beyers says, “A buyout offer won’t make whole the investors who’ve lost on this laggard, but it’s the best deal we’ll see.”
In the TechCrunch article Informatica Could Feel A Tight Squeeze From Its New Owners, Ron Miller says “A CPPIB (Canadian Pensions) spokesperson told TechCrunch that ‘This transaction represents an excellent opportunity to acquire a market-leading enterprise data integration solutions provider alongside a strong partner with significant investing experience in the technology sector.’ As for [Informatica] itself, it didn’t want to comment on the record and referred me to the press release. If you read between the lines, Informatica was sold because it had to, and it gave its investors what it wanted. ‘After careful consideration and deliberation of strategic alternatives, our Board of Directors unanimously concluded that the sale of Informatica to the Permira Funds and CPPIB is in the best interest of all Informatica stakeholders,’ said Sohaib Abbasi, chairman and CEO, Informatica. Well, there you have it. It was in the best interest of…the stakeholders.
Eight Wire as a new entrant to the multibillion dollar data integration marketplace is not expert at pushing corporate assets around in the world of high finance, but we listen to customer concerns. And, we’ve all experienced it before, big company goes through LBO, and multibillion-dollar debt load drains cash from engineering and innovation. Even a 2% bond payment on $5 Billion would be—well, $100 Million. For a company with a record $1 Billion in sales in 2014, that’s $100 Million (10% of revenue) formerly spent on products rather than pay dividends to shareholders, so it appears that there will be a significant change in corporate focus toward cash flow to investors. Just a thought, while the investors have the attention we should remind them that the customer is first?
How do we do that? Many studies demonstrate that Enterprise ETL tools such as Informatica run three different kinds of processes: complex (5%), mid-tier (15%), and simple (80%). Many of the simple jobs extract and convert source information into staging areas for the Enterprise ETL tool. By shifting a significant portion of the simple ETL processes to Eight Wire instead of Informatica you’ll avoid incurring charges needed to maximize shareholder value. And you will be supporting to diversity in a sector that sees little innovation.
Join the movement to diversify data integration, contact us to learn more.