Comments on: Iron Mountain Moves Into Software and Buys Mimosa Systems

By: e-discovery 2.0 » Blog Archive » Electronic Discovery, EDiscovery, E-Discovery, Legal Discovery

Wed, 24 Feb 2010 20:00:28 +0000

[...] the combination work? As Barry Murphy (a former Mimosa employee) points out in his excellent post on this topic, a lot depends on execution. But there are at least 2 reasons to be doubtful. First, [...]

By: Barry Murphy

Barry Murphy — Tue, 23 Feb 2010 19:54:01 +0000

While there are a lot of email archiving products on the market, not many of them have significant market share. Symantec’s EV was far and away the giant of the market. EMC and Autonomy ZANTAZ were next in terms of market share from an on-premise perspective. From a hosted perspective, it was difficult to gauge market share because so much of it was fragmented amongst the SMBs (though Autonomy ZANTAZ owned a large share of the compliance archiving for the financial services industry). Mimosa was really the up-and-comer and very much a thorn in the side of Symantec. I know from experience that all on-premise archiving software had difficulties in terms of successfully scaling to meet customer needs, so buying just any technology and entering the market is not a great option. I actually think the $112M is low given what Iron Mountain paid for Stratify and what Autonomy paid for ZANTAZ, and given was Mimosa could have gotten before the economy went south. For Iron Mountain, this is a medium-risk move. They are getting a software company that has not been able to turn a profit for any considerable length of time and that will face increasing competition from not only Symantec and Autonomy, but also from Microsoft. However, they are not paying the $160M – $200M that many were expecting Mimosa to get. It will be interesting to see what multiples any other archiving companies can get from the likes of NetApp or HP that could use good archiving technologies in their portfolios.

By: eConsultant

eConsultant — Tue, 23 Feb 2010 19:26:08 +0000

Barry,
The valuation has been reported at 3.2x revenue (on an estimated $32m in sales). Is this in line with what you were expecting? I think it is high given that there are nearly 4 dozen email archiving solutions on the market (see http://4sysops.com/archives/email-archiving-software-the-complete-list/ [and see the comments], which is indicative of a low technical barrier to entry. One theory is that Mimosa’s eDiscovery angle and branding may have increased their valuation above what some of their peers can command who do not have the same credibilty and presence in that sub-market.