This morning, enterprise webcasting provider Qumu announced it had been acquired by the Rimage Corporation (RIMG) for $52M in a cash and stock deal. (Disclaimer: I was a minority shareholder in Qumu. More on that below.) With Qumu expected to do around $15M in revenue this year, the deal values Qumu at roughly 3.5x revenue, not a bad valuation in today's market. Founded in 1997 under the name Media Publisher, Qumu focuses on selling a software platform for creating and managing live and on-demand video inside the enterprise, with more than 100 clients globally. This is a very similar acquisition in size to the one we saw in March when Polycom acquired Accordent Technologies for $50M.
This time around however, the company doing the acquisition is probably one that most people have never heard of. Until this deal, I had never heard of Rimage but after speaking to the company over the weekend, on paper, this deal makes a lot of sense. Headquartered in Minneapolis and founded in 1978, Rimage provides hardware based digital publishing solutions to archive, distribute and protect content on CDs, DVDs and Blu-Ray discs. The company also has a virtual publishing platform to allow their customers to securely deliver videos, documents, audio files and images to multiple devices.
Rimage has more than 20,000 customers and specializes in the retail, medical imaging and law enforcement vertical markets in North America, Europe and Asia. The company's digital evidence and surveillance solutions are of particular interest from agencies including the Dept. of Justice, Hamburg Police and the Minneapolis PD. With the acquisition of Qumu, Rimage estimates they will do about $87M in revenue this year and the company is currently profitable.
Qumu will be a wholly owned group of Rimage and will keep it's own branding and identity as well as the current management. To date, Qumu has primarily focused on business in the U.S. and thanks to Rimage, will now be able to go after a much larger market, including companies in Europe and Asia. At Frost & Sullivan, we just published a report on the market for live webcasting inside the enterprise, which we are expecting to grow at a compound annual growth rate (CAGR) of about 24% in the next two years, giving it a market size of more than $250M globally. That's a lot of business for Qumu to go after and with the resources Rimage has, not to mention the deep customer base that Qumu can now cross-sell into, Qumu has a good shot at capturing a larger share of the enterprise video market.
Disclaimer: In 2005 I sat on an technical advisory board for Qumu and was given a minority share of stock in the company. All of my shares were sold to the Rimage Corporation and I no longer have any ownership in either company.