Collaboration Software Provider Jive Sold to a Private Equity Firm
Jive Software, the provider of communication and collaboration solutions for enterprises, has been purchased by the private equity firm ESW Capital through its affiliate Wave Systems for $462 million in cash or $5.25 per share, which represents a 20 percent premium on Jive's average closing share price over the past three months. Jive will become a part of the Aurea family of companies.
"As the leader of the enterprise collaboration category, Jive has pushed the boundaries in how people work together for the past 16 years. It's this focus and vision that has enabled us to deliver industry-leading product innovation, attract a top-notch customer base with recognized global brands and achieve record earnings and profitability in the last announced quarter," said Elisa Steele, CEO of Jive. "With Jive and Aurea coming together, we can deliver the superior end-to-end employee and customer experience companies require in today's digital landscape."
A Glance at Jive Software
Founded in 2001 in Iowa by Bill Lynch and Matt Tucker, Jive Software, moved to Portland in 2004. Unlike other companies in the region that focus on hardware, Jive developed software that provides collaborative capabilities, which are directly associated with business outputs. Due to its significant success, the company paved the way for other technology companies residing in Oregon in terms of the shift from computer hardware to online tools. Finally, once the Portland startup captured the interest of Silicon Valley it moved its headquarters to California in 2010 and soon enough, Jive went public in December 2011. In 2012, investors valued the company at more than $1.5 billion.
Jive’s unprecedented growth encouraged the bigger players to enter the market. As a result, the company got overshadowed by Yammer, a rival that Microsoft acquired for $1.2 billion in 2012, and a new generation of technologies like Slack, due to its lack of third-party application integrations. Former Microsoft executive Elisa Steele was named CEO in February 2015.
In March 2016, Jive Software released a bundle of updates on some of its existing products and launched its employee engagement software for corporate communications. Shortly after, the company went through a realignment plan and cut 100 jobs or about 14 percent of its workforce. As a result of these efforts, last February, we reported on Jive reaching its milestone posting its first quarterly profit as a public company. The results exceeded Wall Street expectations, beating the analyst consensus estimate by $0.04. Its cloud strategy has been considered the most powerful driver behind the growth. During the earning calls, Elisa Steele emphasized that Jive has been positioning cloud deployment as the centerpiece of its future growth strategy as the company moved their cloud infrastructure to Amazon Web Services (AWS). She said: “The change will enable an even more rapid pace of innovation and improve overall service for our customers and their employees, partners, and customers all in a seamless experience as never before. This will also set the stage for increased cloud adoption over time.”
Jive’s significant growth has also been recognized by important industry analyst reports in the fourth quarter as well. Forrester, for instance, named Jive as a Leader in The Forrester Wave, Enterprise Collaboration Q4 2016 report. Jive received the highest possible score for innovation in market approach thanks to its enhancements to Jive’s Collaboration Hub in 2016. The report cited that Jive has evolved from a destination to a hub for access to corporate knowledge.
When it comes to new customer retention, the vendor added many big names to its database, including Canadian Imperial Bank of Commerce, Carlson Wagonlit Travel, Dialog Semiconductor, Elementis Global, Massage Envy Franchising, New Era Cap Company, the Seattle Mariners, and the State Compensation Insurance Fund.
What will this Acquisition Bring to Jive?
First and foremost, despite all these favorable improvements, today, the pressure on Jive is getting bigger and bigger because of the high focus on the enterprise collaboration software space by other longtime players like Microsoft, Cisco, Salesforce, Facebook, and IBM. Therefore, this acquisition is considered as a successful exit for Jive stakeholders.
On the other hand, Aurea, launched in 2012, has already acquired nine businesses. The Austin-based investment firm owned company operates several different enterprise software businesses under its umbrella to "optimize the end-to-end customer journey across a diverse range of industries." Its customers include MetLife, PayPal, and TicketMaster. "Jive, in combination with Aurea, enables us to bring customer experience and employee and customer engagement together," Scott Brighton, CEO of Aurea, said in a statement. "We look forward to helping Jive clients get the maximum value out of their investment with Jive. Everything we do is driven by our singular core value of client success."
In recognition of the cut-throat competition, Jive has been in the M&A talks since October 2015 when private equity firm Francisco Partners Management acquired a 6.6% stake in the company. Additionally, some of the industry insiders expressed that SAP might be interested in buying out Jive Software. Oracle, Workday, IBM and others also have become the subject of these talks but none of them has ever confirmed.
With this acquisition, though, the era of being an independent social software vendor who has a leg-up against the tech titans like Microsoft, is ending as they offer similar capabilities embedded to their platforms. So the idea behind the deal is that combining Aurea’s strength in customer engagement and Jive’s strength in employee engagement to deliver the superior end-to-end employee and customer experience. It is considered a good match.
The deal announced the sale on the first day of its annual JiveWorld conference for clients in Las Vegas. "I hope this will mean good things for Jive employees and customers," said Matt Tucker, Jive's co-founder and former chief technology officer. He departed from Jive in 2015 and launched a new Portland company last year, called Koan. "I'm thankful for what Portland did for Jive and it's the reason I'm back here for (my) next startup."
Although I agree that Aurea is not the best match for Jive, it is certain that Jive’s deep expertise in employee collaboration will complement Aurea’s deep understanding of customer experience management. On the other hand, the vendor has already come to the point where it can’t translate its prior success into a steady supremacy in the market. Being an independent social software vendor, the battle with both newer products and huge enterprise software providers would have gotten harder and harder for Jive, once the fastest-rising star in the Portland tech community, due to the ever-increasing interest in next-generation enterprise collaboration software. Therefore, this deal can bring a breath of fresh air to both companies as competition fiercely grows for both the customer experience management market and the enterprise collaboration software space.
Although Jive has been innovating especially in analytics, search, personalization, mobile, extensibility, and UX, there are some capabilities that still need improvements to catch up with the other solutions’ advanced features in the space. So the upcoming months will tell us if ESW Capital will use the acquisition as a cash cow or invest in the platform to provide the superior end-to-end employee and customer experience, as Jives’s CEO promised.