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The Citrix-LogMeIn Merger: GetGoing or LogMeOut

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The Citrix-LogMeIn Merger: GetGoing or LogMeOut

By: -
27 Jul 2016

After the market close on Tuesday, 26-July, Citrix and LogMeIn announced their intention to spin off Citrix’s “GoTo” offerings – dubbed “GetGo” – and merge it with LogMeIn, which markets  Citrix claims the transaction to be valued at ~$1.8 billion, with the resulting company generating over $1 billion in sales (~1/3 from LogMeIn, ~2/3 from GetGo). 

The mechanics of the deal, which is expected to close in 1Q 2017 subject to approvals, involves Citrix shareholders receiving LogMeIn shares and LogMeIn shareholders receiving “up to” $1.50 per share in cash (Citrix will pay $25 million to LogMeIn upon closing) in a “Reverse Morris Trust” transaction that will result in no tax consequences for Citrix.  The ownership of the resulting company will be comprised of 49.9% LogMeIn and 50.1% Citrix shareholders.  The company will be based out of LogMeIn’s Boston headquarters, with LogMeIn’s current President and CFO forming the core of the new leadership team.

Here’s what I think about this deal from the “Collaboration” perspective (as nicely delineated on the LogMeIn-sourced chart above), which accounts for the majority of revenue for the resulting business.

This is the merging of two top-tier web conferencing providers, each with their own history:

  • GetGo has the longer history and a wider set of mature offerings that includes the full suite of GoTo offerings (GoToMeeting, GoToWebinar, GoToTraining) plus a stand-alone audio conferencing service (OpenVoice).    
  • GoToMeeting has well performing audio and video which is wrapped in a refined, tried-and-true (though perhaps a little too “classic”) UX that is reasonably easy to navigate and, once learned, never gets in your way.  Yes, we like GoToMeeting.
  • LogMeIn is the “upstart” and, capitalizing on LogMeIn’s experience from their flagship remote access offering, has successfully applied their freemium approach to to build a fast growing business.
  •, while not as full-featured as GoToMeeting, is more innovative and has positioned itself as a nimble competitor.  An example:’s video conferencing, while late to market vs. the competition (and not as well performing in terms of video quality), displays each video participant in a “bubble” – which is different, refreshing, makes better use of screen real estate, and requires less bandwidth.  Yes, we like too.

The two companies share a common distribution synergy: a focus on SMBs sold via direct sales without channel partners – which is distinctly different from the other top-tier web conferencing competitors (Cisco WebEx and Adobe Connect).   This common market approach, along with projected cost overlaps in product development and G&A, is the basis for the claim that the combined entity can potentially eliminate $65M in year one and $100M+ in the second year in costs after the merger.  Makes sense.

So what does life look like after the merger?

  • A major direct competitor for each company in the SMB space goes away. Not to be underestimated. WHEW!  (Though who do we steal customers from now?)
  • Lots of soul searching goes on to figure out how to merge two very different but fundamentally overlapping offerings, along with the added complication of dealing with GoToWebinar and GoToTraining (maybe the latter goes away as Alan Greenberg, our training/EDU guru, tells me he believes it has seen little market traction since its introduction). This will be no easy feat, but is doable: witness BlackBoard’s successful merger of the Elluminate and Wimba teams – and creation of a new platform that took the best from two overlapping products.  While the finance folks will want this ASAP to save costs, in reality that  will take at least 18 months.

Then comes the real challenge: these two offerings compete in a market that is under siege from several directions, as web conferencing is rapidly becoming a feature of higher-order offerings.  WR’s latest Web Conferencing Suppliers forecast classifies GoToMeeting and as “stand alone hosted services” (as opposed to “collaboration suites”) with a forecast of under 3% CAGR revenue growth over the next five years – placing them in the lowest growth area of the four quadrants we cover in the forecast.  Competition is gnawing away at hosted stand-alone web conferencing from VCaaS services (Zoom, Blue Jeans Network, et al), Unified Communications providers (Microsoft Skype for Business, fellow Boston-based Fuze, et al), and Persistent Collaboration Spaces (PCS: Cisco Spark + WebEx, Slack, et al). 

I give this merger a “B” grade.  If I were to grade it with cost-cutting being the primary goal, I’d give it an “A” due to the substantial overlap opportunities – but in all frankness, I have been hoping for more. It is no secret that Citrix has been shopping GetGo around for almost a year, since they announced its spinoff last November.  I would have liked to see a merger / acquisition with a company where the GoTo products are used to expand an existing SMB-oriented services offering – DropBox or Box, a telephony services provider like 8X8 or Vonage, or a PCS solution like Slack, etc.  The perfect merger would have moved GetGo out of the “stand-alone hosted services” web conferencing quadrant doldrums and into an area experiencing faster growth. Apparently no others were interested or no one could muster financial terms that made sense. 

Next-gen LogMeIn will need to make a bold move beyond synergistic cost reductions and iterations on a merged web conferencing offering – or else, in three years, we’ll be looking back at this as the merger of two dinosaurs.