Recently acquired for $62 million (U.S.) by the private-equity fund Francisco Partners (FP), library-software vendor Ex Libris reports it will continue to operate from its current locations and with its current team of executive management. But the new ownership of Ex Libris by Francisco Partners (“one of the world’s largest technology-focused private-equity funds”) gives the vendor access to extensive financial resources—which it may need to fulfill its ambitious productdevelopment strategies.
FP manages approximately $5 billion in capital and has offices in Menlo Park, California, and in London. It focuses its investments entirely in the technology sector, dealing primarily with mature companies rather than start-ups. About twenty high-tech companies currently comprise FP’s portfolio, and company officials characterize its investment strategy as, “Our objective is to generate superior investment returns by partnering with the management teams of technology companies facing strategic or operational inflection points and using differentiated experience, insight, and resources to build value for shareholders, employees and customers.”
Ex Libris—previously owned by various groups, investment firms, and individuals, each of which has agreed to sell its shares to Francisco Partners—began its commercial existence at the Yissum Technology Transfer Company at the Hebrew University of Jerusalem. (Yissum manages the commercialization of the University of Jersualem’s intellectual property.) Until the agreement with Francisco, Yissum was the largest investor in Ex Libris Group, owning twentynine percent of the company.
Two Israel-based venture-capital firms have invested in Ex Libris in recent years as well. Beginning in about 1998, Walden Israel invested a total of $4.8 million in Ex Libris, and Tamar Technology Ventures invested $2.2 million. Prior to Ex Libris’s recent acquisition, these two firms held preferred shares, entitling them to receive payment ahead of other investors. As they exit from involvement in Ex Libris, both Walden and Tamar garner a four-fold return on their Ex Libris investments.
The remaining Ex Libris shares were owned by individuals associated with the company—its founders, executives, and former executives. All together, these individuals held about twenty-five percent of the company’s shares.Ex Libris Stats
Ex Libris currently stands as the third largest of the library-automation vendors, with revenues below those of SirsiDynix and Innovative Interfaces. The company reports its customer base at 2,500 libraries in 62 countries. In addition to its ALEPH library-automation system, Ex Libris’s other major products include the SFX link server, the MetaLib federated-search environment, and the Verde electronic-resource management system. This year, the company also announced Primo, a new information-discovery and delivery tool (see March 2006 SLN, “OPAC Sustenance,” p. 1).
Although since its inception Ex Libris has developed a customer base of libraries throughout the world, it has gained a strong position in the U.S. in a relatively short period of time; currently, about forty percent of the company’s overall revenue is derived from U.S.-based libraries.
From a business perspective, Ex Libris has been a growth opportunity. Its revenues have increased from about $5 million in 1997 to $34 million in 2005; on average, the company sustains an annual fifteen-percent growth in revenue.
Impact on Libraries
Ex Libris’s ownership transition is not expected to represent any major change for the company’s library customers; the rigorous process that FP follows to select companies in which to invest stands as an affirmation of the viability of Ex Libris. As noted previously, the company’s management, products, and development strategy will remain in place.
As of the transaction’s completion this month, Ex Libris will join other library-automation companies wholly owned by single private-equity firms, i.e., SirsiDynix, (owned by Seaport Capital) and Extensity Library Solutions, formerly Geac (owned by Golden Gate).
Overall, this sale of Ex Libris does not significantly alter the dynamics of the library-automation industry. The number of companies competing in this limited market remains high, and each company’s relative size to each another remains status quo. Although this move may be observed as a boost for Ex Libris, it does not by itself represent major change in the larger landscape.
|Institution||Initial Investment||Final Return||Percent Ownership||Additional Dividend||Yissum Technology Transfer Co. of the Univ. of Jerusalem||20.5 M||30%||3.0 M|
|Walden Israel||4.8 M (U.S.)||19.2 M||25%||2.5 M|
|Tamar Technology||2.2 M (U.S.)||10.8 M||20%||2.0 M|
|Other Investors||11.5 M||25%||2.5 M|
|TOTAL||62.0 M||100%||10.0 M|
Really Respectable ROI|
The purchase of Ex Libris is Francisco Partners’ first foray into the library-automation industry and its first company based in Israel. Former investors (see table) are exiting financial involvement with Ex Libris with more-than-decent returns on their investments.