What is a 1+1=3 Acquisition?

We classify a book publishing software vendor's merger or acquisition as a 1+1=3 if it has a dramatic effect on the sales of the vendor's publishing software.

Example: 1+1=2 Acquisition

The Media Services Group Ltd's 2005 acquisition of S3 Pubtech; and its CisPub book publishing software product line, complemented their existing Bookworks product line, increased their customer base among book publishers & distributors, and improved technical support for existing customers; however, it has not lead to increased rates of sale for either book publishing software solution - CisPub or Bookworks.

Example: 1+1=3 Acquisition

International Business Services' (a $300M+ company) 2005 acquisition of TMS ($10M+ company) and their Bookmaster book publishing software dramatically increased the sales potential of Bookmaster. The number of new clients signed up in the United States has greatly increased since the merger and Bookmaster is now supported and sold by IBS offices in 22+ countries. The software is being extended to support the Spanish language, and support for additional languages is forthcoming. This merger has the potential to quadruple the sales of Bookmaster.

Vista Merges with Ingenta PLC

In February Vista; a leading book publishing software provider of ERP solutions, merged with Ingenta, a provider of online publishing services to form Publishing Technology PLC, a publicly traded company listed on the London Stock Exchange AIM market.

"Publishing Technology plc will employ approximately 180 people across North America and Europe. The company will have over 350 publishing customers, including eight of the ten largest publishing houses in the world, such as Hachette, Random House, Penguin, and Reed Elsevier and, unlike large international ERP providers, the company will deliver configurable publishing-specific software solutions tailored to its clients. The company will also have 1,000 academic and corporate research library clients, such as Louisiana State University Library and Glaxo SmithKline’s research library, and a number of multilateral institution clients, such as the World Bank, the IMF and the OECD."

Our conversations with the employees of Vista revealed that both companies are truely excited about the merger. The employees talking about developing new products and marketing campaigns that build upon the strengths of both Ingenta and Vista.

From our perspective, the Vista-Ingenta merger is unlike any of the other recent mergers in the industry as it has the potential to truely grow the size of the market for both product lines. A true 1+1=3 merger.

Oxford University Press Implements SAP IPM

At Book Business Expo 2007 we learned that Oxford University Press is implementing the SAP Intellectual Property Management module.

The SAP IPM module's functionality covers rights management; including rights availability tracking, and royalty accounting.

From our perspective, the key advantage of SAP IPM is that the publisher can extensively customize its functionality and user interface to meet the "unique" needs of their publishing house.

Software Selection > Programming Language Evaluation

Any software selection process should include a review of the application layer; programming language, that drives the software and the financial strength of its vendor. An application layer supported by a profitable and growing company will facilitate future improvements to the software.

At Kensai we rank the application layer on a scale of 1 to 5, with 5 being the highest rank.

Example 1.

One publishing software vendor uses Unify Corporation’s Vision product as its application layer.

A visit to the application vendor’s website; http://www.unify.com/, (on Feb 25, 20007) revealed the following;

• For fiscal year 2006 ending April 30, 2006 Unify reported total revenue of $11.2 million, compared to $11.3 million in the prior fiscal year. Net loss for the year was $682K compared to $2.4M in the prior year.
• For the first six months of fiscal year 2007 ending October 31st, total revenues were $3.9 million, a decrease of $0.9 million, or 19 percent from fiscal 2006 six-month revenues of $4.8 million. Year to date net loss from all operations was $941,000 or $0.03 loss per share, compared to a net loss of $107,000 or $0.00 loss per share in the comparable period last year.
• The Vision product does not appear to be the primary focus of their R&D efforts.
• They have offices in the UK, US and Paris.
• They have 60 employees.

Based on the above information we would assign a rank of 1 or 2 to the application layer. Why? The vendor's sales are declining, the company is losing money, the application - Vision - is not the primary product of the vendor and they have only 60 employees.

Example 2.

Another vendor uses Microsoft .NET VB as their programming language.

Based on this information we would assign a rank of 5 to the application layer. Why? Microsoft is the world's largest software company, the .NET initiative is a major focus of Microsoft, and there are tens, if not hundreds, of thousands of programmers and businesses that use this programming language.

Vista Acquires Ingenta

Wow, Vista - a leading supplier of ERP systems to large publishers - acquired Ingenta; a distributor of online products, in a reverse merger to form a new company called Publishing Technology Plc.

What does this mean?

1. Vista is now a publicly traded company on the London Stock Exchange's AIM marketplace. As a publicly traded company it will have access to the capital markets to fund future growth via acquisitions or increased R&D spending.

2. Vista is now a provider of distribution software for both printed and online products.

3. Access to Ingenta's 266+ publisher clients will likely facilitate increased sales of Vista book publishing software in the future.

4. Vista, now a $33M USD publicly traded company (based on Pro-Forma financials) has increased its competitive strength vs. Klopotek (a $23M company) and IBS Bookmaster; its two main competitors.

What Training Tools do the Vendors Offer?

Training is critical to the the success of any book publishing software implementation.

At Kensai when we evaluate software for our clients we rank each training tool on a scale of 0 to 5.

These tools include:

1. Software Documentation
2. Software Tutorials
3. On-Site Training
4. Off-Site Training
5. On-Line Training
6. Flash Tutorials

We also get first hand feedback from the vendor's clients. Is the training effective? Did the employees retain what they learned?

We compile this information to come up with a training score of 0 to 50 for each solution.

Evaluate All of Your Options

Smart publishers evaluate all of the available software options. They don't look at just one or two solutions.

They gather information on all of the available publishing specific software solutions.

They look at best of breed solutions.

And they evaluate hiring programmers to build a custom solution for their needs.

When Random House looked for a rights management solution they talked to all of the vendors. They looked at the PC based Bradbury Phillips Rights 2000 product and they looked at the costs of building their own solution, using SAP. They choose SAP, which their company already used.

Another large publisher followed the same evaluation process and selected the Bradbury Phillips Rights 2000 product.

Both publishers evaluated all of the options available to them and made a decision based on their business requirements.