Double-Take Grabs Tiny CDPer

Replication software maker Double-Take's purchase of Canadian CDP startup TimeSpring could prove to be one of the best small M&A deals of 2007 -- or not, depending on your perspective.

Double-Take closed the acquisition of Montreal-based TimeSpring for $8.3 million in cash on December 26. All 15 employees, most of them engineers, will be retained in their Quebec headquarters, and TimeSpring's CEO/CTO Rick Carlson, who's been with the firm for nine years, will stay on through the transition period.

On a conference call with financial analysts Wednesday, Double-Take's CEO, Dean Goodermote, cited the following reasons for buying TimeSpring:

Goodermote stressed that with the addition of a TimeSpring's software, sold as an add-on to Double-Take's products, customers will now have more granularity in the data retrieval process. He hopes to start making money from the new option in about six months.

Up to now, Double-Take has claimed to have "byte-level continuous replication." The catch is, you can't get back anything but "the most recent version" of data, applications, and operating systems. With TimeSpring, customers could get more specific. They could retrieve SQL databases from multiple points in time; search SharePoint versions to retrieve specific items; or access individual emails in Exchange.Goodermote says that TimeSpring, like Double-Take, uses a file-based approach and that the smaller company has developed a product that closely resembles what Double-Take, also file-oriented, would have developed in the future, given time. Goodermote also hopes to place the 15-odd engineers from TimeSpring into open positions at Double-Take and possibly get them involved in research funded by Canadian organizations.

All of it sounds viable. But when questioned by financial analysts on a conference call, Goodermote's reasoning rang hollow.

For one thing, there's the matter of buying 15 engineers for $8.3 million -- over $500,000 a head -- considering that TimeSpring earned less $1 million in revenues throughout its lifetime.

When asked whether the anticipated TimeSpring personnel costs were in the ballpark with those of other employees at Double-Take, Goodermote at first didn't know. His CFO quickly stepped in to say that yes, they were.

Then there's TimeSpring's product, which basically never made a blip on the storage radar. Is this really what Double-Take needs to spend $8.3 million on right now?Goodermote admitted he's not losing deals for lack of CDP, but since the opportunity's presented itself, he'd rather be safe than sorry. "We wonder over time if [CDP] won't be a competitive issue," he told analysts Wednesday. "It's something we can take care of right now."

Time may prove that Double-Take's choice to grab a wee bit of CDP software and expertise was fortuitous. Even if it's a mistake, Double-Take could probably afford it, given its robust growth since going public last December.

At least one analyst thinks Double-Take's acquisition is minor but interesting. "Eight million is a step up from an asset sale," says Arun Taneja of the Taneja Group. "but even if TimeSpring was dead in the water, replication and CDP are very synergistic."Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.