It’s official: The Informatica acquisition is done. One of the 800-pound on-premise gorillas and long-time stalwarts of data integration was acquired this week in a leveraged buyout by European private equity firm Permira Advisers and the Canada Pension Plan Investment Board.
This private equity acquisition follows the Tibco (another on-premise gorilla) acquisition in 2014 by Vista Equity partners.Beyond the many questions about what the Informatica acquisition means for customers, the fact that two of the bigger vendors in the integration space were acquired within 6 months of each other certainly signals a massive shift in the integration landscape.
Both companies were founded in the 1990s, long before the Cloud and APIs came to dominate the conversations within both IT and Line of Business organizations. Tibco and Informatica built their success on-premise and grew into publicly traded companies over the past 20+ years. The world has changed dramatically in those two decades as the market has shifted away from old acronyms like ESB and ETL and their heavy footprint deployment models.
Tibco was slow to adapt to the rise of the cloud, first announcing its foray into Integration-as-a-Service in 2013. To their credit, Informatica transitioned much sooner, announcing it’s cloud offering back in 2006. But 9 years later, its SEC filings from Q4 2014 indicated that it’s subscription services accounted for just 7% of its quarterly revenue, with the remainder split between services and licensed on-premise software.
So the $5.3 billion dollar question is “What does the Informatica acquisition mean for its customers?” Leveraged buyouts have a storied histories, particularly from their infamous days in the 1980s. (You may have caught “Barbarians at the Gate” a movie that focused on the leveraged buyout of Nabisco.) What we do know is that when a company is acquired in a leveraged buyout it means the buyer has used borrowed money to put up enough cash to acquire the company — and are using the company’s products and cash flow as collateral to get the loan — with the expectation that they can use these assets to repay the loan.
The players involved in the Informatica acquisition are bullish that they can streamline and optimize operations to focus on the most profitable and largest sources of cash in order to pay off the loan. With a laundry list of offerings, both developed and acquired, Informatica sells dozens of different products:
ETL, Information Lifecycle Management, B2B Data Exchange, Cloud Data Integration, Complex Event Processing, Data Masking, Data Quality, Data Replication, Data Virtualization, Master Data Management, Ultra Messaging
Which products will they focus on? We would place our bets on following the money: look for the new Informatica to rally around its main sources of revenue and highest margin offerings.
Of course, only time will tell – and it will be an interesting story to watch unfold over the next 12 to 24 months as Informatica looks to shake things up internally.
Jitterbit’s money and focus continues to be 100% on digital connectivity and enabling non-developers to integrate their digital assets in the cloud. If you’re interested to see how we stack up against Informatica, contact us for a free Swap-out assessment.