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SSA Global Joins IPO Parade

June 9

SSA Global announced this week that it planned to go public this year, the third such Chicago tech firm to do so in recent months. (The other two are Morningstar and Navteq.)

While the announcement took some by surprise, an IPO is consistent with SSA's rapid-fire ERP software acquisition campaign and its VC investors' typical interest in timely exits.

In September, 2003, we reported that SSA CEO Michael Greenough wanted to make the firm the “Wal-Mart of software” after closing on six acquisitions that year. We understand that statement to mean SSA intends to mass market competitively-priced ERP applications.

In February, 2004, SSA exec Don Gibson described the company’s no-nonsense M&A and post-deal integration approach at the annual Kuhn Capital Tech M&A Today conference. There he stated that SSA believes it's “less expensive to buy software than to build it,” and “cheaper to acquire customers than organically grow the base.” (Read Don's presentation here.)

SSA says it plans to apply $200 million from the IPO to repay debt and “for general corporate purposes,” which will probably include more ERP acquisitons targeting the middle-market. (In fact, the company disclosed in recent SEC filings that it's talking to two targets now.) SSA generated 2003 revenues of $297 million, with an EBITA/sales ratio of 23%.

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