Verint's $514 million Kana acquisition: Does it add up?

A series of smart acquisitions made Kana valuable to Verint, which basically bought its way into the customer experience software market.

Verint's purchase of Kana Software for $514 million was a deal built on a series of wise acquisitions by the acquired.

The official line is that Verint's acquisition of Kana Software combines big data intelligence with customer engagement software.

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What was striking was the returns for Kana owner Accel-KKR. Accel-KKR took Kana private for $41 million in cash in 2009. A little more than five years later, Accel-KKR landed $514 million. That return is heady no matter how you slice it.

So what happened to make Kana so worthwhile? For starters, Kana brings 900 customers to Verint and those companies are cross-sell opportunities. Kana has also been a regular on CRM Watchlist, founded and run by ZDNet contributor Paul Greenberg. Toss in the fact that Kana is in a hot space with customer engagement and you can justify some of the price tag for Verint.

But what really made Kana worthwhile is that it made a bunch of smart acquisitions of its own. Verint basically made four or five acquisitions in a key market in one swoop.

Greenberg noted last year about Kana:

Much as I could talk about Kana's product suite, I want to focus on something else for these guys. That desire to acquire. From 2010 through 2012, they made four what appear to be very intelligent and possibly brilliant acquisitions each to fill a need that would give them both increased global reach, greater vertical penetration, a richer and deeper product set and more highly experienced management teams. These are the four:

  1. Lagan Technologies – October 2010 – This gave KANA a public sector and European footprint that was dramatically expanded. Lagan brought with it some astounding customer references, excellent management and a very, very good technology.
  2. Overtone – April 2011 – KANA bought the technology which gave KANA a social listening and text analytics platform to integrate across their enterprise applications.
  3. Trinicom – April 2012 – A Dutch cloud services based customer interaction engine and web customer service provider that was aimed at the SMB market.
  4. Sword Ciboodle – July 2012 – CRM Watchlist 2012 winner Sword Ciboodle was perhaps, in the long term, the best acquisition of all though Lagan certainly might cry foul here. Sword Ciboodle did complex enterprise call center work adapted to the 21st century’s business requirements. They also provided KANA with a great staff – Steven Thurlow who runs KANA’s technology development, Paul White who runs EMEA sales, Kenny Bain who is the GM for EMEA and Clare Dorrian, an analyst relations superstar. They also benefited from a marquee customer list and expanded scope in EMEA and to some extent, in the U.S.

It's unclear how well Kana integrated these acquisitions. It's also unclear how Verint will integrated the rolled-up Kana. But it's certain that Verint acquired enough raw material to be a customer experience player. That potential may be worth the $514 million.