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Wednesday, February 24, 2010

Mimosa Systems acquired by Iron Mountain

On February 22nd, Iron Mountain announced that it had acquired archiving vendor Mimosa Systems for $112 million – 5.4 times Mimosa’s 2009 revenues of $20.6 million.

The acquisition is an interesting one on a couple of levels. First, Mimosa Systems is a very solid archiving vendor, one of the leading players in the email archiving space, despite the fact that the company was not yet profitable (it had a bit more than $32 million in expenses in 2009). The company also offers archiving capabilities for SharePoint and other electronic content, as well as e-discovery, .PST archiving and disaster recovery solutions. Mimosa was fairly well funded, receiving $34.5 million in venture capital funding by April 2008 and another $17 million from various sources through January of this year.

Second, the acquisition is interesting because it bucks the trend in which hosted archiving vendors have been the prime acquisition targets (Fortiva, ZANTAZ, MX Logic, MessageLabs, FrontBridge, MessageOne, etc.) By acquiring Mimosa, Iron Mountain now has a very solid player in the on-premise archiving space and a broader range of offerings for archiving customers. Plus, it gives them the opportunity to provide a solid hybrid offering, a trend that we think will pick up steam over the next 24 months.

The acquisition price was certainly not high by historical standards. For example, Veritas bought KVS for $225 million in 2004 and EMC bought LEGATO for $1.3 billion in 2003. However, given the size of Mimosa’s substantial customer base, coupled with a still soft economy, the value of the deal was not at all bad for either company.

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