The acquisition will add more than 300 products to L’Oreal’s lineup.
Francisco Partners, a private equity fund focused on technology companies, in March agreed to acquire the WebTrends analytics unit that NetIQ Corp bought four years ago. The deal, expected to close in June, gives Net IQ Corp. $94 million in cash, gets it out of the analytics business and makes WebTrends a private company.
Not long ago, Internet systems and security products as well as analytics products had the same core customer: the IT executive. Not anymore. In one more indication of how web analytics is moving out from under IT`s wing and into the control of business managers, the only major company to offer both lines is splitting up.
Francisco Partners, a private equity fund focused on technology companies, in March agreed to acquire the WebTrends analytics unit that NetIQ Corp. bought four years ago. The deal, expected to close in June, gives Net IQ Corp. $94 million in cash, gets it out of the analytics business and makes WebTrends a private company.
"The web analytics market has evolved in that the new target customer for web analytics is really the business owner, the merchandising and marketing people," says Greg Drew, general manager of the Web-Trends unit. Drew will become CEO of the new freestanding company.
Between installed software and hosted service, WebTrends already has the largest share of the web analytics market, with revenues estimated at about $50 million. But it faces an increasingly competitive analytics market whose field has been estimated as high as 80 vendors by Forrester Research. Against that context, one key benefit WebTrends will gain from the deal is freedom from some of the constraints under which public companies operate, and as the result of that, the ability to focus more tightly on growth, says Drew.
Complying with requirements such as the Sarbanes-Oxley legislation on accounting and financial reporting carries both financial and management expense, he adds. "As a private company we will be able to stay focused on what the customer wants and not be as distracted by some of a public company`s obligations," he says. "We think the combination of our market share, blended with the ability to be more nimble, is going to be a powerful combination."
WebTrends` revenues represent about 18% of revenues at NetIQ Corp. About 70% of sales are installed software, with the remainder in hosted web analytics services, but Drew sees that balance shifting to 50/50 in the near future with the hosted model now finding favor in industry sectors including retail and travel.
Long-term, however, he believes there could be a shift back toward software installation, the model already more favored in industries such as financial services and healthcare. "As customers become more familiar with web analytics, they are going to want to integrate more with back-end systems," he says. "And whenever you have an interest in back-end integration, software is usually considered more strongly."