Sirit acquisition just the latest in VC exits
Where have I been? I completely missed last week’s Sirit (SI:TSX) acquisition.
As signs go, the small cap M&A market has been confirming for some time that the business climate is substantially better (see prior post “M&A deals a sure sign of brewing confidence” Aug 5-09) than it was this time last year. NYSE-listed Federal Signal’s $50 million acquisition of Sirit speaks to the trend that we’ve seen for some time: RFID plays are natural tuckunders, but adoption has just not come to pass like we all anticipated in, say, 2005. At least not in the form that would make investors a premium return.
For Sirit’s VC major institutional shareholder, JLA Ventures, this is a beautiful outcome. JLA’s Limited Partners have already benefitted from stock sales along the way representing (I suspect) their investment cost base, and this particular sale transaction is that wonderful thing called “gravy”.
Canadian LPs will not ignore those PE and venture firms that have been able to achieve meaningful exits during a very difficult time in the North American economy.
Sirit’s key management team (CEO Norbert Dawalibi and CFO Anastasia Chodarcewicz, come on down) can also be proud of the fact that they survived RFID’s own mini nuclear winter and recast the business and their technology applications in a way that made the company a sustainable franchise. Which is exactly why the company is attractive to would-be acquirors.
Congrats to John Albright and his team at JLA, Sirit execs Norbert and Anastasia and long time supporter Rick Segal (former VC and now Fixmo Co-Founder). Exits aren’t easy, and NYSE-listed buyers only pay for quality.
MRM
Sirit has been a complete dog for a long time. How can get gravy out of this one.
One of Segal’s deals is barely getting its money back. JLA invested at $0.30 in November 2003, then in May 2006 at $0.26 per share. JLA completely missed the golden opportunity of disposing its shares when Sirit’s stock was trading above $1 in 2004 and 2005, it has continued to hold all of its holdings to this date. An IRR of a miscule 0.2% is nothing to be proud of.
ZT
Thanks for stopping by.
If you looks back at the public filings from a few years ago, you’ll see that JLA sold more than enough stock to cover the cost base of their position at that time. The most recent transaction would be defined as “gravy” as a result.
MRM