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BMC Going Private In $6.9 Billion Deal

Posted by samzenpus on from the have-a-bunch-of-money dept.

itwbennett writes "In a much-anticipated move, IT infrastructure management software vendor BMC has agreed to be acquired for $6.9 billion by a private investment consortium headed up by Bain Capital and Golden Gate Capital. The deal is expected to close this year."

32 of 49 comments (clear)

  1. Again? by arth1 · · Score: 3, Funny

    I thought Leyland had already bought BMC.

    1. Re:Again? by Pseudonym · · Score: 1

      I just checked, and it looks like BMC is still owned by Springer.

      --
      sub f{($f)=@_;print"$f(q{$f});";}f(q{sub f{($f)=@_;print"$f(q{$f});";}f});
  2. Apologies to Roger Stirling by Karl+Cocknozzle · · Score: 1

    "From one john's bed to the next!"

    --
    Who did what now?
  3. Must be a New Footprints Version coming out. by Deathlizard · · Score: 1

    Every Time Footprints Up's a version, The Company gets bought out.

    So far...
    BMC
    Numara
    Unipress
    Footprints Software
    And I'm probably missing a company or two in there.

    --
    In Soviet Russia, Trojan exploits YOU!
  4. Re:Bye, bye BMC by Bigby · · Score: 2

    ...of which each spinoff component will be more efficient than the whole.

  5. Goodbye BMC! by Anonymous Coward · · Score: 3, Interesting

    I was on the receiving end of a Golden Gate Capital acquisition, management was gutted and everything that made our company a success for over 40 years was thrown to the wind.

    Those of us that were left had to pick up the slack with inexperienced management and shaky client relationships. It wasn't long before most of the senior developers in our branch hit the eject button making things worse.

    Then they took away benefits and put on a wage freeze, it became apparent by the end that really they just wanted the clients we had but not our business.

    Which was sad, for a time we had something great.

  6. Re:Another company moving to China by alen · · Score: 2

    romney is not a neo-con

    he happens to be a former republican governor of a liberal state where he passed a government health care law that became the model for the current ObamaCare

  7. Re:Another company moving to China by ganjadude · · Score: 1

    you DO know romney has no power at bain anymore right?

    --
    have you seen my sig? there are many others like it but none that are the same
  8. Time to begin your migrations... by rnturn · · Score: 1

    Patrol -> Nagios

    Control-M -> ????

    before the licensing costs go through the roof.

    (I predict that they'll be laying off software developers once Bain starts "improving" the business.)

    --
    CUR ALLOC 20195.....5804M
  9. Efficient? Never in a LBO. by ReallyEvilCanine · · Score: 5, Informative
    The first thing that will happen is that the golden parachutes of the execs who okayed this will be repacked once they can no longer influence it, and their money will most likely be tied in corporate paper which will become worthless because...

    The buyers will pay themselves huge "consulting" fees and borrow at least three times the company's value/worth, spending none of it on growth and everything on themselves and their premier shareholders. The hollowed out shell will be saddled with impossible debt as jobs are wiped out, shipped away, and a fragile shell of a company will pretend as long as it can that it's still viable, scrrewing everyone and everything in its past.

    You can watch their m.o. in the histories of Kay-Bee Toys, Dunkin Donuts, and Continental Bakeries just to name a few off the top of my head.

    1. Re:Efficient? Never in a LBO. by Safety+Cap · · Score: 1

      I applied to BMG a few years ago. Thank dog I didn't get the job (they weren't "ready" to hire, but were "ready" to interview)...

      And now all those people will be on the street in a few-18 months.

      *cackle*

      Better check my 401k and make sure none of it holds NASDAQ:BMC. That thing is going to drop like a rock.

      --
      Yeah, right.
    2. Re:Efficient? Never in a LBO. by Anonymous Coward · · Score: 1

      What about the "going private" part don't you understand? You bet your ass that your 401k won't hold any BMC. It's not going to drop either - it's going to disappear.

  10. Bad price to potential debt ratio by T.E.D. · · Score: 5, Insightful

    This is the sad fate in store for companies that are relatively cheap to buy compared to how much debt they can still take on.

    Some vulture capital firm will swoop in, borrow a bunch of money to take them over, then force the poor company to pay them back for the takeover costs, plus every other last cent the victim is now capable of borrowing. They make millions (sometimes) billions without risking a cent once the takeover is complete.

    Everybody wins. Well, except perhaps for the banks and their investors when the companies go backrupt. And the workers who thought they were dedicating their toil to making products people wanted, not creating temporary paper value for rich folks to come in and loot.

    This is why they call themselves "job craters". They don't spell it that way in print of course, but we all know what they mean when they say it.

    1. Re:Bad price to potential debt ratio by Anonymous Coward · · Score: 1

      And the workers who thought they were dedicating their toil to making products people wanted

      Having been involved in implementing a big pile of BMC stuff here at work, I've gotta say that I don't think any of those are at BMC.

    2. Re:Bad price to potential debt ratio by PhamNguyen · · Score: 1

      Your post contains a lot of contradictions.

      First, private equity firms do invest a lot of their own money in the firms they buy (hence the name. They invest private money (that of their owners/shareholders) into equity by buying firms). If they didn't banks would be rightly suspicious of the deal since the private equity firm would get paid no matter what happened.

      Second, because of this, it is in the interests of the private equity firm that the company do well. In theory, if the PE firm bought a controlling share (say 51%) they would be in a position to screw over the remaining 49%, for example by selling the firm's assets to some other company owned by the PE firm, at a discount rate. This would most likely be illegal. Apart from this mechanism, the interests of the PE firm are exactly the same as the remaining shareholders: to get as much money from the firm as possible.

      Finally, if it is more profitable to sell a companies assets and fire all its workers, then this is a good thing. If you don't already believe this then I don't have space to prove it in this post, but the general idea is that labor and capital are just like any other commodity, and so a company whose share price today is less than the value of its in place assets, is like a giant inefficient machine that consumes capital and labor for what is effectively negative profit.

    3. Re:Bad price to potential debt ratio by alexander_686 · · Score: 1

      This is not vulture capitalism. Vulture funds, like the birds, feed off dead corpses. I don’t think BMC is dead or dying company. I am not saying that Bain doesn’t do this stuff – but this is not the case.

      As for vulture capitalism themselves – do they harm dying companies by restructuring them? Is a slow death better then chopping off the dead flesh so a smaller, healthier, company can emerge? I mean, look at what the vulture capitalist Warren Buffet did with broadcloth make Berkshire Hathaway? Is society better off when he shut down the mills?

    4. Re:Bad price to potential debt ratio by Errol+backfiring · · Score: 1

      First, private equity firms do invest a lot of their own money in the firms they buy (hence the name. They invest private money (that of their owners/shareholders) into equity by buying firms). If they didn't banks would be rightly suspicious of the deal since the private equity firm would get paid no matter what happened.

      Not exactly. They invest some "own" money and borrow the rest from a bank. The bank has no conscience either, so it is also in it. It is a kind of slavery where the slaves have to pay for their own chains.

      Second, because of this, it is in the interests of the private equity firm that the company do well. In theory, if the PE firm bought a controlling share (say 51%) they would be in a position to screw over the remaining 49%, for example by selling the firm's assets to some other company owned by the PE firm, at a discount rate. This would most likely be illegal. Apart from this mechanism, the interests of the PE firm are exactly the same as the remaining shareholders: to get as much money from the firm as possible.

      Now you contradict yourself. The goal is to squeeze as money as possible out of the victim. That is not the same as having that firm run well. On the contrary. The victim is squeezed dry, and the predators go on to the next victim.

      Finally, if it is more profitable to sell a companies assets and fire all its workers, then this is a good thing. If you don't already believe this then I don't have space to prove it in this post, but the general idea is that labor and capital are just like any other commodity, and so a company whose share price today is less than the value of its in place assets, is like a giant inefficient machine that consumes capital and labor for what is effectively negative profit.

      Capital is just a number typed in a computer if a bank is part of the robbers. Labour is a need in society. Seeing it as a commodity is downright evil. That "commodity" was the very thought that was the basis of the Enclosure.

      --
      Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
    5. Re:Bad price to potential debt ratio by T.E.D. · · Score: 1

      First, private equity firms do invest a lot of their own money in the firms they buy

      They "invest" that money, then take every penny back from the company coffers the instant they take it over. The only way any of that initial money is at any kind of risk is if either they fail to take over the company (and their run at it didn't drive up the stock price before they bailed), or if it turns out the company can't borrow enough money to cover their nut once they take it over. Assuming they did their homework right, there is very little risk there, and it is very breif.

      it is in the interests of the private equity firm that the company do well

      To a certian extent this is quite true, because when the Vulture firm flies off, every penny they get for either the stock or the pieces is now profit for them. More profit is clearly better.

      However, this is not the cheif way they make money on the "venture". The main goal is to get the company in question to borrow every penny they can, which the Vulture Capital Firm greedily swallows up. Once that is accomplished, they fly away.If they can sell the remnants for more than they paid, that is great. If not, that's not as good, but still not a disaster because the company itself paid for a lot of its own takeover. They only really lose money if they couldn't siphon out more cash than the delta between their entrance costs and their exit costs.

      So basically, they take a company that is hurting but as has one big thing going for it (an ability to borrow money to find a way out of their current difficulties), and swoop in to take that away from them.

      Finally, if it is more profitable to sell a companies assets and fire all its workers, then this is a good thing

      In finance / Gordon Gekko land, this is quite true. In the real world, not so much. Actual products and actual jobs mean a great deal to socieity. I guarantee you that Apple, Microsoft, and Google all had several times in their early history where they would have been worth far more if someone had swooped in and done exactly what you suggest. Probably every company that was ever done anything worth a damn has. However, they had people in charge who belived there was something worthwhile about what that company was about and could potentially do in the future that was worth fighting for. They persevered and changed the world.

  11. seems appropriate by jd2112 · · Score: 2

    BMC products were the bane of my existence at a previous job. Typical "Enterprise" crap. Costs a fortune, theoretically can do almost anything you want it to if you throw enough consultants and programmers at it. Out of the box it does very little.

    --
    Any insufficiently advanced magic is indistinguishable from technology.
    1. Re:seems appropriate by AbRASiON · · Score: 1

      Bane of my existence also, utterly awful stuff.

    2. Re:seems appropriate by Digit+Machine · · Score: 1

      As I read this I'm waiting an BMC Remedy to respond so I can actually start working. I hope bain puts BMC out of business.

    3. Re:seems appropriate by Limburgher · · Score: 1

      You said it. I can't wait to put that nightmare behind me.

      --

      You are not the customer.

  12. Re:Another company moving to China by lgw · · Score: 2

    Make no mistake, romney is a neo-con.

    Neo-con: a conservative who supports a strong-pro-Israel middle easy policy. I don't think Romney had a position either way on that - he was pretty focused on domestic stuff. "Neo-con" doesn't mean "those guys I hate" - you can still just say "those guys I hate", it's OK.

    --
    Socialism: a lie told by totalitarians and believed by fools.
  13. That's not what people mean by rsilvergun · · Score: 1

    when they say 'Vulture Capitalist'. Despite the etymology when people use the phrase 'Vulture Capitalist' they mean buying a company with the specific intention of stealing everything of value in a legal manner. See numerous examples elsewhere in this thread.

    Moreover, the narrative we're being sold is that you buy a company because you want it to succeed. This is why we allow "job creators" to have so much wealth. It's the justification we're given for wealth inequity that investors will risk their capital to grow a business. Terminology aside the fact is buying companies to gut them is a common business practice today. Hell, it's why you don't have pulp Sci-Fi. The books had one distributor and it got Bained.

    --
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    1. Re:That's not what people mean by alexander_686 · · Score: 1

      That is just plain sloppy use of language – it like lumping all football players together – no matter if they are a striker or a quarterback.

      In your context, covers the whole private capital / hedge fund. I would just be simpler – and more accurate - to drop the vulture and just derided capitalism.

      However, in the private capital / hedge fund world, vulture capital means something else.

      http://www.investopedia.com/terms/v/vulturefund.asp

      Sure, they like to go by fancy names, such as distress debt, turn around operations, Warren Buffet, etc., but we know what they are. This deal fall into the mega cap leverage buy out

    2. Re:That's not what people mean by T.E.D. · · Score: 1

      This is like complaining that you don't like the way everyone else in the world uses the word "hacker". You may have a bit of a point, but human language is about communication, so majority really does rule. Sorry. I hate what the same process has done to the words "hacker" and "enormity", but I only get one vote.

      In this case, I don't think its that bad though. Essentially, "Vulture Capital Firm" has come to mean something a bit different than "Vulture Fund". A "Vulture Capital Firm" is simply a supposed "Venture Capital Firm", that instead of looking for promising startups to fund like we normally think of such firms, looks for companies with a very low cost to potential further debt ratio, snaps them up, then loads them up with all the debt they can, while extracting all the cash they can as "fees". This easily includes every penny spent to acquire the company. Sure, they do try to keep the company afloat as best as they can until they can unload either it and its assests, just because if its still worth something then, that's even more money for them. But if that means they sell it for scrap, or the company falls apart like the Bluesmobile the instant they step out of it, they don't really care.

      It is still a bit consistent, as typically it isn't perfectly healthy companies that end up in this situation. A perfectly healthy company that isn't already loaded down with debt won't have a low stock price unless investors are staying away from it for some reason. Assuming the investors are being rational, there's probably something systemically wrong with it. So in this case the "vultures" are swooping in on something that isn't dead, but is probabaly walking wounded, and finishing it off. That is in fact part of the normal behavior of the Vulture they are being named after.

      Vultures seldom attack healthy animals, but may kill the wounded or sick.

    3. Re:That's not what people mean by Errol+backfiring · · Score: 1

      I think the term slipped in because in the choice between "Venture capitalist" and "Vulture capitalist", the latter clearly sounds more appropriate (vultures already arrive if the animal is not dead yet). "Venture capitalist" sounds as if nothing is wrong with it.

      --
      Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
  14. Re:Another company moving to China by bmo · · Score: 1

    Neo-con: a conservative who supports a strong-pro-Israel middle east policy. I don't think Romney had a position either way on that

    His whole foreign policy page was *titled* "American Century" and he gave a speech on a "New American Century."

    http://articles.washingtonpost.com/2011-10-07/politics/35277977_1_clarity-of-american-purpose-mitt-romney-isolationist-shell

    He didn't think of that on his own. His foreign policy page and speech echoed the Project for a New American Century and its descendant the Foreign Policy Initiative.

    Listen to his speech, then read this:

    http://www.newamericancentury.org/statementofprinciples.htm

    Then look at the signatories.

    And read the FPI statement:

    http://www.foreignpolicyi.org/about

    Former members of PNAC are now members of FPI. Indeed, 3 of the 4 board members of FPI were Romney's foreign policy advisors. Dan Senor (his head foreign policy wonk) said on Meet The Press that we'd unquestionably back Israel in an invasion of Iran. Romney didn't back away from that.

    Romney is a neocon.

    We narrowly escaped having to pay for a *third* war in the middle-east.

    --
    BMO

  15. hooray! by cas2000 · · Score: 1

    three cheers for asset-stripping vulture capitalist scumbags.

    they'll get richer gutting and eventually killing off BMC, but that's a small price to pay for the death of BMC Remedy.

  16. Re:Another company moving to China by gmhowell · · Score: 1

    Make no mistake, romney is a neo-con.

    Neo-con: a conservative who supports a strong-pro-Israel middle easy policy. I don't think Romney had a position either way on that - he was pretty focused on domestic stuff. "Neo-con" doesn't mean "those guys I hate" - you can still just say "those guys I hate", it's OK.

    As a devout Mormon, he most likely did have a pretty strong Israel policy.

    --
    Jesus was all right but his disciples were thick and ordinary. -John Lennon
  17. Re:Another company moving to China by TheSeatOfMyPants · · Score: 1

    Actually, ObamaCare's model is from a Bush I/Clinton-era plan. Bush submitted the individual mandate as a proposal, then in 1993 the conservative Congress tried to pass a variant as the Health Equity and Access Reform Today Act, which was -- like Obamacare -- an individual mandate with penaties for non-compliance. (See the third paragraph of this section in Wikipedia's ObamaCare article.) Romney's plan was considered important because it was the first time it was actually enacted, thus demonstrating that they could attempt something like it without causing total disaster.

    The plan itself has always been conservative-corporatarian in nature, though. The reason it has been picked up by the Democrats is essentially that politicians in general have become increasingly conservative & capitalist over time, so the Democrats of today tend to be very similar to average Republican politicians ~2 decades earlier. When it comes to Romney, he seems to follow the same path that most politicians do regardless of which party they belong to: aiming for what they perceive as centrism when elected at the local or state level, then shifting strongly in favor of conservative-corporatarian soon after being elected at the Federal level.

    --
    Now mostly at Usenet:comp.misc & SoylentNews.org (it's made of people!)
  18. Re:Bye, bye BMC by Bigby · · Score: 1

    And that is less efficient? Apparently, in that case, the IP was the only thing of value. Keeping a failing company open only delays the inevitable. Destroying it quickly allows for reallocation to happen more quickly.