Intuit and Others Bid on Bankrupt Entellium
The soap opera surrounding Entellium continues to unfold, as the company filed this week for Chapter 11 bankruptcy protection amid efforts to sell its assets. Scandal broke out around the CRM player in October when its top two executives were charged with wire fraud.
[Editors' Note: Earlier coverage of the scandal can be found on our blog here and here, and on destinationCRM here; coverage in CRM magazine can be found here and here.]
According to Entellium's bankruptcy filing, the company is claiming assets worth $37.7 million against liabilities that total $12.7 million. Intuit, a provider of enterprise resource planning solutions for small businesses, has come forward with a bid of $7.6 million for the Entellium pieces, subject to the approval of the bankruptcy court
There's quite a bit at stake when one vendor starts picking over the parts of another, says Laurie McCabe, vice president of SMB insights and business solutions at AMI-Partners. In this case, she says, it's going to be more about Entellium's intellectual property. Entellium's customer base, she speculates, has likely dwindled since the scandal erupted. Part of this is due to well-timed offers from CRM competitors such as Avidian, designed to entice Entellium users to switch to their CRM products. McCabe notes that Entellium's actual software may be more attractive than its customer base. "They have a fairly strong product," she says, adding that Entellium's Rave offering was unique in the marketplace. "Anyone that is even cautiously interested is going to make sure they've really peeled back every layer on the onion and know exactly what they're getting into," she notes.
Brent Leary, cofounder and partner of CRM Essentials, a CRM consulting/advisory firm focused on small and midsize businesses agrees on this point. "Entellium -- the product itself -- was good," he says. "The [gaming-influenced] interface was really almost revolutionary.... It was clear, it was fun, the functionality was good." Leary is a proponent of Intuit's purchase of Entellium, saying that the match certainly makes sense, and that $7.6 million is a reasonable -- if not bargain-priced -- bid.
"Maybe [Intuit] is looking to add the missing piece to the small-business puzzle," Leary says. He points out that many of Entellium's existing customers might already be using Intuit's Quickbooks for accounting. Whereas many small businesses often sign on with accounting solutions right away, graduating to a full-fledged CRM system often comes further down the road for the typical SMB. For Intuit to pick up a CRM offering would round out its product line, Leary says. "It would be like a growth engine -- and if they could [make it] seamlessly integrated, it could be a total win-win."
Intuit did not respond to a request for comment.
Of course, McCabe says, whichever company picks up Entellium will be sure to do away with the branding -- and the stigma -- of the Entellium name. She says, however, a company with the breadth and reputation such as Intuit wouldn't have a hard time doing so. In addition to Intuit's bid, three other companies are rumored to be interested in Entellium's assets. McCabe speculates that a company with large- and upper-midmarket presence might be interested, provided the company wants to do something related to software-as-a-service downstream. Or, she says, a company might be interested in picking up just the sales force automation capabilities within Entellium's Rave product.
Both analysts say that, regardless of the outcome of the bankruptcy filing, it will be interesting to see how the Entellium saga plays out. "It's such a tragic story in terms of end results from employee and customer standpoints," Leary says. "I still wonder how this all could have happened -- a company that's been around that long for this to be discussed four or five years later is crazy to me. If I were a small business it would make me a little more hesitant to go with companies that aren't tried-and-true and that haven't been around a long time."
Leary goes on to emphasize that there are some small companies providing great value and service to customers that might be hurt by Entellium's wrongdoings. In the future, vendors might have to alter their approach with prospects to establish their credibility early on. "They will have to be extremely transparent," Leary says, "and focused on delivery and on service that much more."
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