Covalent and SpringSource: here we go again

Gee… commenting Open Source acquisitions is turning into a full time job. I didn't have a chance to dump my thoughts when the SpringSource/Covalent merger hit the news as I was dashing through London like an headless chicken: a lot has been said already, which means I'll be the latecomer to the party and just add a few random notes for my memoirs.

First of all, let me extend my kudos to Mark Brewer and the Covalent crew: this is a very good opportunity to strengthen the Open Source support business model, and SpringSource looks like an excellent partner. I consider Covalent one of the best Open Source companies around, so it's really good to see them moving forward at a faster pace. It's no news I'm not exactly a fan of Rod Johnson's obsession for separation of IP creation and monetization (read: "no one outside of SpringSource is able to support the Spring framework", AKA "I want my cake, and eat it too"): I believe that there is more to Open Source than gating access to committership as a way to defend a business, but I guess that's just me and a bunch of others. As Covalent is bringing some great folks to SpringSource, there might be a good chance for them to bite Rod and friends with the Apache and Open Development bug, so we might end up with a closer bound between Apache and Spring, which is most definitely a Good Thing.

Having said that, I have to note I feel awkward when describing this deal as an acquisition: while the actual details of the transaction are private, we know about the 10M$ upper limit, that is what Rod Johnson milked from his round A from the deep pockets guys. The money changing hands has got to be much less: SpringSource got the funds last May, so it's safe to say most of it should be gone by now. On top of this, an undisclosed amount of shares went the Covalent shareholders' way. 

We have to remember Covalent was privately held, so all in all the deal is not that bad, despite landing at least couple of zeros behind what seems to be the standard nowadays. However, given the minimal amount of money and the potential role of shares, I can't stop wondering why SpringSource and Covalent decided to hit the press with an acquisition news, when the actual description of the deal looks so much more like a merger to me. Petty naming discussions aside, I believe that from a PR standpoint announcing the deal as a merger would have resulted in a much better perception of two leading companies in their respective spaces joining forces to hit the market as a bigger and better endeavor.

Marketing the transaction as an acquisition might strengthen the perception of SpringSource being tall and strong, but this comes at the price of somewhat diluting the value of Covalent which looks like the weak part of the deal, especially when you look at the numbers involved. As I have a passion for Mark and friends, there is a good chance I'm biased: most likely the Covalent folks are still recovering from hangover and are perfectly happy with the deal. Still, I believe the net effect of a  communication along the lines of a merger would have been easier to understand and a stronger proposition altogether. Nevermind this small gripe, I won't pass on any champagne left from the celebration, so here comes my virtual toast to SpringSource and Covalent for getting together and making Open Source a better place!

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