M&A Observations: Whither Goest Genesys?

Run For The Exits

It was announced yesterday that Salary.com had completed the divestiture of the Genesys business for $2.5 million.  They had bought this business at the tail end of 2008 for a damn sight more at what were then considered fire sale prices from the former owners of Genesys, primarily Larry Munini, who was also the founder and CEO of that Snowdon of Yesteryear.   

Many of us thought Kent Plunkett had made a strange tactical move when he bought the former Genesys, but his strategic vision of delivering an entirely integrated system of record and talent management suite wasn’t at all strange.  As you all know, that’s a part of the HCM product strategy of everyone from Workday (from the SaaS ERP community) to SuccessFactors/Softscape/SilkRoad (from the talent management community) to Lawson/Oracle/PeopleSoft/SAP (from the legacy ERP community). 

The most interesting aspect of this second fire sale of a long-since depreciated asset is that the buyer has insisted upon anonymity.  Since every customer will learn at some point who their new vendor is, and then we’ll all know, one has to wonder at what type of buyer would need such secrecy.  Is it Larry Munini coming out of retirement under cover of darkness?  Is it Vista Partners buying this thing to fold quietly into their well-run Accero/Cyborg?  Is it some Indian firm hoping they can reverse engineer the beast over the weekend and make it part of their US middle market BPO platform?   

Genesys is so traditional a US payroll, and not a payroll engine, that it’s hard to see its buyer thinking otherwise, but then there’s one born every minute.  And clearly the folks at Salary.com who did the deal to buy Genesys underestimated mightily what it would take to derive value from this asset while overestimating their ability to do so. 

If I were a Genesys customer, I’d be running for the exits.  But then these folks should have done so years ago.  If I were Lawson, I’d be doing a targeted campaign if Genesys is still serving any healthcare customers as they once did many.  Can’t wait for the next chapter to the Genesys saga.