Autonomy buys Interwoven: A sensible marriage

The Lundquist news department devoted to covering mergers and acquisitions has been mighty quiet lately. With the economy in turmoil and the venture capitalists deciding to take the year off, the prospect of mergers often fall into the forced marriage category. As for acquisitions – which with the promised land of tech IPOs looking like a desert – had become the “exit strategy” of choice for founders and investors, well acquisitions just aren’t in the cards either in 2009.

So it was with undue interest that I took note of the British-based Autonomy’s $775 million acquisition of Interwoven on January 22. Could this be the start of tech companies with access to cash going on the hunt for companies looking for a way out of this tech winter? I don’t think so and that is good news. Here’s why.

Autonomy was founded in 1996 based, in part, on search research developed at Cambridge University in England. The focus was and is on making sense and discovering (this word will be important later) information in unstructured data. While the rows and columns of corporate information contain a lot of a company’s knowledge, it is in the unstructured data of emails, instant messages, audio and presentations where most of the business of business gets done. It was that ability to dive into unstructured data upon which Autonomy was founded.

Now, which chunk of our economic world really likes to dive into unstructured data and find the tidbits that can change a company’s future? Bingo! The legal industry. There is nothing like the discovery process to find all those embarrassing and sometime incriminating messages that can turn even the most upstanding executive into a candidate for hard time in a cold place.

Interwoven was founded (1995) about the same time as Autonomy. The company was early at jumping into the web content management system business at a time when few companies even knew that someday their face to the world would be via the World Wide Web. The company has built a good business in the corporate world and offers a comprehensive if somewhat locked-in suite of content management solutions that extend into many types of content. Not the least of
their business is the legal industry with over 1,000 customers.

With the acquisition, Autonomy has the possibility of becoming a full service provider able to track and discover any piece of corporate content from documents, voice or video idea to final form. In this age of compliance and demands for corporate transparency after the current horrors of the financial
system, a full content creation and discovery suite will become de rigueur for corporations.

Does the Autonomy/Interwoven marriage signal the start of a round of tech acquisitions? I don’t think so. This tie-up makes sense all around at the strategic level for the two companies. Acquisitions for stoking unbridled growth rarely make sense and certainly don’t make sense in this economic environment. But tie-ups that allow you to easily fulfill your company’s strategic direction makes sense if you have the money. The Autonomy/Interwoven tie-up makes strategic sense and the company had access to the money. There aren’t too many other high tech companies out there right now that fall into the Autonomy/Interwoven category.