OK Columbo, one more question

So now everybody's favorite analyst is dressing up in a wrinkled rain coat and trying to figure out who done it. I don't know Mike, I figured you more for a Barney Miller type.  Anyway, seems Mike Rothman thinks I have my own self-serving interests at stake when I mentioned that I thought the Counterpane deal was a firesale.  He claims that 2x revenue for a slow growth services company is fair, unless they were out of money. Mike then says the real problem is people like me are banking on 6 to 8 times revenue, so anything less is firesale territory.  OK Sherlock, let me set you straight here a bit:

1. Counterpanes MSSP business is not some slow growth services company.  Generally pure services or professional services do go for a 1.5 to 2x multiple, you are right. However, MSSPs are more of a managed services play with a nice reoccurring revenue model, more akin to the managed services providers in hosting and ASP.  A 2x multiple for managed services sucks.  Counterpane was not a professional services company.

2. I think they were out of money or running out of money.  Nothing to do with the recap, but I heard from multiple sources that they were low on cash.

3. Preventys was a fire sale too.  They threw out the whole management team, redid the cap table too (i am pretty sure) and actually had very few customers.  It was common knowledge they were being shopped hard or die.

4. Citadel - lets throw them into the mix too.  At one time (not that long ago), Steve Solomon and gang would have laughed at a 56m buyout.  But they had other issues with delisting, law suits, etc. to deal with, so I guess took the opportunity to get out, while the getting was good.

Mike, good software companies, security or otherwise still command the 6 to 8x or higher multiples we are talking about.  I guess we will have to wait and see when one of them goes down.  Until then in the words of another TV cop, Who loves ya baby!