Over at European Capital Partners Paul Elosegui reports on a very quiet but large software buyout that took place last week: the acquisition of a 75% stake in bootstrapped Spanish anti-virus software vendor Panda Software. There has been no press release, and local news coverage is sparse. Paul suggests the valuation was €133m. Back in 2005 the company was already generating revenues of €100m, so if the valuation is correct, then Panda's growth must have stalled since then.
It was always going to be a tough ride to remain as an independent, small AV vendor in a mature market dominated by Symantec, McAfee and Trend Micro. Panda is a great example both of:
- a successful, bootstrapped European software business that makes it to the global stage; and,
- a founder-managed business that waited too long to bring in outside investors.
This is pure speculation, but indulge me. I suspect market conditions for this company started getting really difficult in 2005, perhaps earlier. At that point it should have invested in new products in order to protect itself from increasing competition and declining margins in the AV business. At the time Panda could have raised significant private equity capital, probably at similar or higher valuations than today. With the right investor the founders may have been able to expand their market opportunity, reduce their exposure to the AV market, and add key managers that could grow the business beyond €100m in revenues.
The obvious example of a European company that did exactly this at the right time (but perhaps with mixed success) is Sophos, where the founders took £41m from TA Associates for a minority stake in 2002.
It's of course somewhat churlish to suggest that Panda founder Mikel Urizarbarrena got it wrong: since he owned virtually 100% of the business he's walking away with as much as €100m, which probably ranks top 10 among the takes of the most successful European tech entrepreneurs....
P.S. There is now an official press release on the Panda website.