Microsoft Bids $1.2B for Fast Search and Transfer

It’s a busy week so no time for a deep analytical post (yet), but I wanted to get this news out fast. Microsoft has bid $1.2B for Fast Search & Transfer. See this New York Times story for more.

My initial take:

  • It’s a quite healthy valuation of ~8x the revenue run-rate, partially justified by an above-average growth rate. (Disclaimer: numbers approximate and from memory.)
  • Some of it, I bet, is psychological, because $1.2B gets back to the “recent” peak valuation (during the past year), prior to the accounting scandals which rocked the company and whacked the stock. In my experience, company sellers tend to hang on emotionally to “recent” highs in deciding their price. Sometimes they get the old valuation back. Sometimes they don’t. In Fast’s case, the 52-week range was ~8.5 to 18.5 kroner. The deal is, I believe, at 19 kroner. (Note that the chart seems to miss the last day’s trading, which took the stock up to about 18.5 kroner.)
  • It seems a logical ending for Fast. As I pointed out a few times in this blog, Fast was letting the same guys who got the company in trouble continue to run the company (with one or two changes). I thought this was a mistake. I thought it didn’t hold the executives accountable. I thought they wouldn’t be able to fix the problems. So selling to Microsoft seems a practical solution to these problems.
  • This post on the Microsoft Enterprise Search Blog quotes Kirk Koenigsbauer, General Manager of the SharePoint Business Group, which suggests that the SharePoint team drove the acquisition.
  • A friend at Microsoft had this to say: “[the] deal was all about enterprise search competitiveness (at the high end) vs. Google and to an extent IBM. Both search engine capabilities and connectivity to line of business [systems], content management, and other data sources.”

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