Commentaries and insightful analyses on the world of finance, technology and IT.

« November 2009 | Main | January 2010 »

December 16, 2009

Cloud based Financial Accounting Applications

2009 saw lauch of many interesting Cloud based offerings.... FinancialForce.com is one such offering providing cloud based accounting solution.

FinancialForce.com provides  application for accountants and CFOs for realtime financial accounting information.  Their site claims "The company has been created to exploit and expand on the CODA 2go on-demand accounting solution and its technology. It is backed by Unit 4 Agresso (parent company of accounting software specialist CODA) and salesforce.com. FinancialForce solutions combine CODA's 30 years of designing and building financial applications, with salesforce.com's decade of platform dependability, availability and security".

http://www.financialforce.com/solutions/customers lists a sample list of customers who are using this offering,

We could see more such offerings in the coming year.

 

 

Posted by Srinivas Prabhala at 04:21 AM | | Comments (0) | TrackBacks (0)

December 07, 2009

Update: PIPE Activity Continues to Increase

Back in August I wrote an entry on how mega-funds were starting to utilize PIPE (Private Investment, Public Equity) transactions instead of complete buyouts (http://www.infosysblogs.com/finspeak/2009/08/megafunds_are_using_their_pipe.html#more). This is essentially taking a large stake in a public firm which provides returns at market levels, similar to what an individual investor can do (possibly minus the large stake). Since private equity firms typically target above market returns, this is a somewhat risky decision since it can create a drag on the overall fund return. The latest PIPE updates from PitchBook seem to indicate that many are not concerned and are actively utilizing this investment vehicle.

 

 The latest PitchBook update (www.pitchbook.com) from November shows that PIPE investment for 2009 is targeted to exceed $7B. This is greatly more than 2007 ($1.4B) when private equity had access to cheap credit so buyouts were a better option and less than 2009 ($13B) when the markets turned upside down. This makes a terrible trend line on a graph so let’s look at the situation a bit more closely. First, with the markets gaining significant value this year, well timed public investments could provide a significant boost to a fund’s value. This is the obvious play and really does not enable a PE firm to exert much control over the investment target. The second scenario is that, with credit still tight, some companies have turned to private equity as a banker to provide cash infusions. It is a very convenient marriage since PE has a significant amount of unallocated capital that it has not been able to deploy and many companies have struggled with existing debt covenants that limited a further ability to borrow. In return, the PE firm gets discounted equity or other warrants in addition to agreements such as board seats (see KKR’s investment in Kodak during September).  At this point, the PE firm gets significant returns about the market and is able to influence management. In normal times, this scenario would not necessarily play out in a similar manner, but provides all parties with a win in this non-traditional banking relationship. With debt markets not fully recovered, look for more of these transactions in the near term.

Posted by Jeremy Kloubec at 03:21 AM | | Comments (0) | TrackBacks (0)