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Documentum sold by EMC to OpenText

You are here: Home / Documentum / Documentum sold by EMC to OpenText

September 12, 2016

September 12th, 2016 – OpenText Signs Definitive Agreement to Acquire Dell EMC’s Enterprise Content Division, including Documentum.  This post will provide our thoughts on the upcoming purchase.

What was the deal?

Since early this year when Bloomberg announced that EMC was selling Documentum, we have posted some of our thoughts:

  • October 12th, 2015 – Dell to Buy EMC for 67 Billion
  • April 7th – EMC said planning to sell Documentum Business Amid Dell Deal (Bloomberg)
  • September 7th – Documentum Sale – What now?

Some key points of the deal:

  • Deal includes all of ECD (Documentum, InfoArchive, Captiva as well as consultants)
  • Purchase price of $1.62 Billion (2.7 times FY15 revenue of $599M)
  • Target to onboard to OpenText in first 12 months
  • Expected to close within 90 to 120 days
  • Subject to regulatory approvals and customary closing conditions

TSG thoughts

A couple of things caught us by surprise about the announcement.

  • The purchase represents a continued consolidation of the legacy ECM market.
  • The purchase price of $1.62 billion was much larger than we would have expected. It must say good things about both ECD’s profits (estimated at 30% of the $599M) as well as the ability of OpenText to procure cheap debt to finance the deal (announcement mentioned 1 Billion in Debt).
  • We had hinted about OpenText as a potential purchaser since they, much like EMC, had been consolidating a suite approach recently buying (Brava in 2015 as well as many others as documented on the OpenText Wiki page).  Given the amount of product overlap, we didn’t think it was a high probability and we were leaning toward private equity.  The high price speaks loudly that not only was OpenText in the position to procure the debt but they also had a strong desire to procure the ECD division.

Some of our preliminary thoughts:

  • As a public company, OpenText can offer options and other incentives to the former EMC employees that had their options vest as part of the finalization of the Dell purchase of EMC. We would anticipate that OpenText would look for synergies in both Sales and Engineering so we would anticipate some layoffs.  We are still worried about key ECD employee and consultant retention given the OpenText brand as well as layoffs.
  • We are concerned about product overlap with OpenText already providing many of the capabilities provided by ECD/Documentum. We saw some of these issues with the IBM/FileNet, Oracle/Stellent purchase where products (and clients) were orphaned as consistent solutions were chosen.  We would anticipate a bias within OpenText for the OpenText products but, given the large purchase price and technical components of Documentum, could see it lean toward Documentum as well.

Preliminary thoughts from John Newton (Documentum co-founder, Alfresco founder)

I can just imagine the turmoil this is going to cause in both OpenText’s and Documentum’s customer bases. Will the Documentum repository supersede the OpenText repository or vice versa? Will there be a migration strategy? Will OpenText integrate yet another ECM system haphazardly as they have in the past? Will they just try to deal with the coexistence with a confusing message of what to use when?

Look here for more later as additional information comes available.

See our thoughts from last year in regards to how Documentum compares to Alfresco, one of the newer disruptors in the ECM space.


Free Alfresco Documentum Comparison Whitepaper




Filed Under: Documentum

Reader Interactions

Comments

  1. Tony Ford says

    September 12, 2016 at 1:43 pm

    I’ve been working with Documentum for over 15 years in oil and gas, federal government and higher education. I am also very curious to see if the lines get blurred between the existing OpenText ECM product suite and Documentum. I’ve enjoyed working with Documentum and I hope OpenText will continue its legacy.

    Reply
  2. Michelle Bedard says

    September 14, 2016 at 3:33 pm

    Do you know if ApplicationXtender was included in this deal or if it’s still a Dell product?

    Reply
    • Dave Giordano says

      September 14, 2016 at 3:40 pm

      Yes – ApplicatoinXtender was included in the deck on Page 7 – you can grab it here – http://investors.opentext.com

      They didn’t discuss it in the Webcast but it is included. Look for an updated post from TSG tomorrow.

      Dave

      Reply

Trackbacks

  1. Documentum Sale – What Now? – Technology Services Group says:
    September 12, 2016 at 12:56 pm

    […] of EMC has closed 6 months later without the sale of Documentum, (September 12th Update – Documentum sold to OpenText) this post will address our thoughts on what will happen to Documentum, now part of […]

    Reply
  2. Documentum sold to OpenText – Detailed Analysis and Predictions – Technology Services Group says:
    September 15, 2016 at 9:02 am

    […] it was announced on Monday, September 12th that OpenText was buying the ECD Division (that includes Documentum) from EMC/Dell, we have conducted multiple conversations with customers […]

    Reply
  3. Documentum bought by OpenText – what do OpenText customers think? – Technology Services Group says:
    September 29, 2016 at 9:39 am

    […] most of the focus in regards to the announcement this month of the purchase of Documentum by OpenText has been on what will happen to the Documentum customers, we got some insight from this week’s […]

    Reply
  4. Documentum purchased by OpenText – 4 ways to reduce the risk of an unknown OpenText future says:
    October 24, 2016 at 1:34 pm

    […] on September 12th, OpenText is purchasing the assets of the Enterprise Content Division of EMC (that includes Documentum among other products).  For more thoughts, see our Detailed Analysis and […]

    Reply
  5. Documentum Risk – Top 5 Reasons to Ditch Webtop says:
    December 1, 2016 at 10:14 am

    […] we have been mentioning her in other posts, due to the purchase Documentum by OpenText, many clients are looking at ways to reduce the risk of an unknown Documentum future.  This post […]

    Reply
  6. marketing automation for small business says:
    December 8, 2016 at 1:19 am

    marketing automation for small business

    Documentum sold by EMC to OpenText

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