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The Finance Base
acquisitions

Why NetApp Acquired Akorri Networks—and What the Deal Cost

NetApp bought Akorri Networks to add performance and capacity analytics for virtualized data centers to OnCommand. The deal closed in January 2011.

By TheFinanceBase Team 2 min read
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NetApp acquired Akorri Networks to add performance-and-capacity analytics for virtualized data centers to its OnCommand management software suite. The acquisition closed on January 31, 2011; NetApp described it as an approximately $60 million all-cash deal, while its audited filings reported a $62.3 million purchase price for all of Akorri.

What Akorri Networks did

Founded in 2005 and headquartered in Littleton, Massachusetts, Akorri was a privately held data-center management software company. Its tools analyzed performance and capacity in virtualized, shared IT environments, helping customers identify bottlenecks and plan storage capacity. NetApp said the software provided visibility across applications, servers, networks and storage. (NetApp announcement, January 12, 2011)

Why NetApp wanted Akorri

The acquisition expanded NetApp’s OnCommand management suite beyond storage-focused management. By combining NetApp’s storage-management capabilities with Akorri’s analytics across a broader virtualized IT stack, NetApp aimed to help customers analyze and automate shared infrastructure, improve service-level delivery and adapt to changing business needs. (NetApp announcement, January 12, 2011; NetApp completion announcement, February 1, 2011)

NetApp’s acquisition announcement cited Gartner positioning Akorri in the Visionaries quadrant and NetApp in the Leaders quadrant for Storage Resource Management and SAN Management Software. The reference is to those specific categories, not to a general ranking of either company across all software markets. (NetApp announcement, January 12, 2011)

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When the deal was announced and completed

NetApp announced the planned acquisition on January 12, 2011. The transaction closed on January 31, 2011, and NetApp’s fiscal 2011 filing says Akorri’s results were included from that date. NetApp issued its completion announcement on February 1, 2011. (announcement; completion announcement; NetApp fiscal 2011 Form 10-K)

How much NetApp paid

The amounts differ because the completion announcement and audited accounting disclosure describe the transaction at different levels of precision. NetApp publicly characterized the consideration as approximately $60 million in cash. Its fiscal 2011 filing reported a total purchase price of $62.3 million for 100% of Akorri, including $7.9 million held in escrow to secure indemnity obligations. The escrow was part of the reported purchase-price detail, not a separate acquisition. (NetApp completion announcement, February 1, 2011; NetApp fiscal 2011 Form 10-K)

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The filing’s purchase-price allocation identified $22.0 million in intangible assets, $23.3 million in goodwill and $9.9 million in deferred income taxes, along with other net assets. These are accounting categories within the acquisition accounting; they are not additional amounts paid on top of the $62.3 million total. (NetApp fiscal 2011 Form 10-K)

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What the deal says about Akorri’s momentum

NetApp reported that Akorri increased its customer base by more than 100% in 2010. That figure is NetApp’s stated growth measure for the year before the acquisition; the announcement does not establish a corresponding revenue or profit growth rate. (NetApp completion announcement, February 1, 2011)

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