Deal Radar 2009: IntraLinks

In 1996, IntraLinks founders Arthur Sculley, John Muldoon and Mark Adams, noticed that the loan syndication market depended on an informal network of couriers, fax machines and email to distribute critical documents. They realized that the process was slow, cumbersome and prone to security problems.

Realizing the potential to streamline the exchange of information in the loan syndication market, they created an efficient and secure online solution: the company replaced emails and faxes, paper-packed deal rooms and overnight parcels with IntraLinks On-Demand Workspaces™, which are deal rooms (or online workspaces) that facilitate communication and collaboration among companies.

Today, IntraLinks provides its clients with secure (the company has SAS 70 Type II-certified security standards that cover its applications, personnel, processes and infrastructure), collaborative online digital workspaces for online exchange of sensitive business information. Its solutions are used in mergers and acquisitions, syndicated loans and alternative investments. According to the company, its solutions have demonstrated a 30% reduction in business-critical information exchange costs and a 20% improvement in work group productivity.

Its SaaS-based model sells directly and through multiple channels for both single use (projects and transactions) and longer-term subscription relationships. However, only about 40% of IntraLinks’ revenues are sourced from the company’s subscription clients. The company’s pricing model is typically based on the volume of information it hosts for exchange, though in some cases it follows a user-based model.

More than 30,000 people visit over 20,000 active IntraLinks workspaces daily. Further, IntraLinks has 750,000-plus active users representing more than 90,000 organizations worldwide and 5,000 industry-leading clients. Moreover, the company has facilitated 55,000 projects and transactions since its inception. IntraLinks views critical information exchange services as a $3 billion-plus opportunity. The company has witnessed six consecutive years of double-digit growth, with gross margins at 78%. Its 2007 revenues were $123 million and EBITDA was $37 million (30% margin). In the first half of 2008, IntraLinks experienced 23% y-o-y revenue growth and EBITDA was $71 million.

The company, which is headquartered in New York, does business with 800 of the Fortune 1000 companies. Its top target segments are: Financial Services, where it does business with 50 out of the 50 top global banks; Life Sciences, where it does business with nine of the top 10 (and 20 of the top 25) firms and is used by more than 18,000 clinical trial study sites around the world; and Energy, where it was used by seven of the top 10 companies in 2008. The client list includes names like JP Morgan Chase, Bank of America, ING Bank, DuPont, Dow Jones and Company Inc. In January 2009, it added Calfee, Halter, & Griswold, one of Ohio’s largest corporate law firms, and Jordan Knauff, a middle market investment bank with offices in Chicago and Kansas City, to its list of clients.

In June 2007, the company raised debt as part of a leveraged buyout from TA Associates, a leading growth private equity and buyout firm, and Rho Ventures, a leading venture and growth equity firm. Prior to June 2007, the company’s investor group was larger, including Rho Capital, Apax, Reuters, Soros/Towerbrook and Euclid. Early investors who subsequently exited also included corporations such as JP Morgan, Johnson & Johnson and Ernst & Young. IntraLinks has raised around $120 million in total through its seven rounds of financing. The company has not raised any new equity since 2001.

IntraLinks is now focused on building a high-value, high-growth company with attractive margins and wants to create an organization that is a credible, standalone public company or an attractive target for acquisition.

Related Reading:

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*Deal Radar 2008: Archer Technologies

This segment is a part in the series : Deal Radar 2009