Filed under: Deals, Technology
Founded in 2000, Kintera Inc. (NASDAQ: KNTA) has built on-demand technologies to help nonprofits with fund-raising. Interestingly enough, the company has never reached a profit. So, it should be no surprise that the stock price was below a buck and that the Nasdaq provided a delisting notice.
Well, things were much brighter this week. Blackbaud (NASDAQ: BLKB), which has an extensive software suite for nonprofits, has agreed to buy Kintera for $46 million or $1.12 per share. On news of the traction, the company’s share price spiked 58%.
For the past year, Kintera has been restructuring operations. For example, the company has reduced its operating expenses by $1 million per quarter.
But, as a part of Blackbaud, there should be even more cost savings, such as with R&D and the salesforce. Keep in mind that there will be no public-company costs for Kintera (which is a massive deal).
Something else: Kintera’s losses are quite valuable. That’s, they represent a $10 million present value for Blackbaud (which can use them to shelter taxes). In other words, this essentially reduces the price tag of the acquisition.
Even though, Blackbaud also sees some major strategic benefits. First of all, Kintera helps bolster the fund-raising segment, which looks like a growth market. Next, Blackbaud is transitioning to on-demand software approaches. Finally, the company will pick up 4,000 customers from Kintera.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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