SAP acquires white-hot Virsa - The Ray Lane effect

SAP acquires white-hot Virsa - The Ray Lane effect

Summary: Today: SAP, the leader in enterprise applications said it is acquiring Virsa Systems, one of the fastest growing private US software companies. Virsa specializes in software to enable companies to be in compliance with Sarbanes-Oxely and other government regulations.

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TOPICS: SAP
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Today:
SAP, the leader in enterprise applications said it is acquiring Virsa Systems, one of the fastest growing private US software companies. Virsa specializes in software to enable companies to be in compliance with Sarbanes-Oxely and other government regulations.

Ray Lane used to be known as one of the industry's best software salesmen a talent that helped him become president of Oracle. In his 8 years at Oracle, sales grew from $1 bn to more than $10bn before he left the company in 2000.

These days he might become better known as the best salesman of software companies as SAP, the world's largest enterprise software maker announced today that it is acquiring Virsa Systems. The financial details were not disclosed.

Virsa is founded by Jasvir Gill, who says he used to be a stand-up comedian. I will resist the obvious line about his visit to his bank.

When I first ran into Virsa at a Horn Group PR event, the executives told me they were giving out "get out of jail free" cards at trade shows. The company's Sarbanes-Oxely compliance software offers a degree of assurance to top executives that their operations are SOX compliant and they won't become the first test court-case.

Mr Gill was very wise to seek out Ray Lane, General Partner at the top Silicon Valley VC firm Kleiner Perkins Caufield & Byers. When I met with Mr Gill last year, in October he said, "We didn't really need funding but I really wanted to have Ray Lane on our board of directors because he really understands the software business."

Ray Lane told me in October that the first thing he did was to enter into a sweetheart deal with SAP. "SAP has the channels and the distribution so we entered into a sales deal in which SAP gets 80 per cent of the business." Mr Lane knew that the rewards would come later--and not much later by the looks of it.

He also made sure that Virsa adopted a platform agnostic position, and would also supporting the Oracle database platform. The goal at this early stage of a company is to develop a customer base so therefore a platform agnostic position is the best choice.

And Mr Lane knew that by offering sweetheart deals the partner would potentially make a lot of money because its sales force is motivated, and it can quickly see the overall value of Virsa--should it consider an acquisition.

There is the additional strategic benefit that one partner could be played off against the other. And in today's hot M&A enterprise software market, it didn't take long to package up Virsa--the fastest growing private software company--and find a willing buyer.

Which other companies might be in line for the Ray Lane effect? From Mr Lane's bio at Kleiner:

He sits on the boards of Elance, Metamatrix, Virsa, Visible Path, Xsigo Systems, SpikeSource and PodShow. He also serves on one public board, Quest Software.
Here are excerpt's from SAP's announcement:

Topic: SAP

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