Case Study: Oracle Acquires FarApp

This company, FarApp, has built an impressive recurring revenue business model providing connectivity to enterprise ERP applications.  The focus of the firm is using a SaaS based product to connect ERP backends to eCommerce front ends primarily for the retail and restaurant vertical.

This highly scalable FarApp platform supports over $5 billion of annual transaction volumes for its over 500 active subscribers.

Highlights of this business include

  • Growing and profitable
  • Extremely low customer churn
  • Low customer revenue concentration
  • Strong reputation and partnerships with key industry players

The primary motivation behind the transaction was the older owner’s desire to retire and secure funds for their retirement. Multiple offers were received mostly from large public companies and private equity funds.  Recognizing the strategic value of the product and subscriber base, Oracle Corporation emerged as the acquirer. This acquisition allowed the retiring founder to retire from active involvement in the business while enabling the younger founder to continue driving its growth.

Industry: SaaS – API Integration Layer

Deal Participants: The company had 2 active owners who worked in the business full-time.  The first owner was in his mid-60s and wanted to retire.  The other owner was in his mid-30s and wanted to continue working in the business.

Transaction Type: Acquisition of 100% of the outstanding shares. (Stock Sale)

Transaction Value: Between $10m-$20m

Transaction Motivation: The buyer purchased the company to gain access to their proprietary technology and subscribers

Transaction Outcome: One of the sellers was able to cash out his position in the company and retire. The other owner could cash out of his position in the company and become an employee of Oracle.