Transactions Sale of Venture-Backed Software Company Celo, a private company focused on developing and deploying internet security software with core technology in public key infrastructure (PKI), had received an offer from a potential acquirer who had a pre-existing relationship with a board member of the company. We were asked to review the situation and advise the company on a course of action. After completing our analysis, which included assessing existing teams with comparably deep PKI capability and related IP, we advised the company that the offer under consideration appeared to be below market and that if the company engaged in a structured process to assess other interest, improvement in value and fit might be obtained. At the time, Celo had about 25 employees--predominantly technical in function--and a management team which was also technical in background. The company had little in the way of product revenues or backlog. The value in the company, in our assessment, included: (1) a strong, recognized technical team, (2) relationships in their category, and (3) IP related to the implementation of PKI in financial transactions. Throughout the decision making cycle we worked closely with the management and board of directors in reaching consensus on an M&A transaction as the best course of action. Once consensus was established, we began a structured process to identify the qualified set of potential acquirers. In this case, we evaluated global leaders in a number of sectors, including enterprise software, internet security, wireless infrastructure, large banks, IT suppliers to these large banks, and credit card IT infrastructure suppliers. In 2001, Celo was acquired by Gemplus, a leading supplier of smart card solutions backed by Texas Pacific Group. Although the sale amount was not disclosed, it was greater than five times the amount of the initial unsolicited offer. Intelligent Capital, Inc. was Celo's exclusive advisor on the sale to Gemplus.
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