Cisco Acquiring Carlsbad, CA-based MaintenanceNet for $139M

Networking giant Cisco Systems (NYSE: CSCO) has agreed to pay $139 million in cash to acquire MaintenanceNet, a Carlsbad, CA, provider of Web software that generates new sales leads by analyzing a company’s service contracts with its customers. The deal includes retention-based incentives, according to a Cisco blog post announcing the buyout.

The deal, expected to close by the end of October, follows Cisco’s June 30 acquisition of OpenDNS, a San Francisco-based Internet security company, for $635 million. On June 3, Cisco disclosed plans to buy Piston Cloud Computing, another San Francisco-startup, although financial terms of that deal were not released.

Cisco has been a MaintenanceNet customer since 2009, Debbie Dunnam, a Cisco senior vice president of global company success, said in a blog post Tuesday. MaintenanceNet specializes in cloud-based software that scans a company’s warranties and service contracts  and figures out products and services that need to be renewed, which are past due, and suggests other products their customers might be interested in buying. MaintenanceNet said it delivered nearly 2.5 billion automated service quotes last year, resulting in millions of dollars in incremental revenue increases for clients worldwide.

“As more of the business models in IT shift to a recurring revenue model for products, software, solutions and services, the ability to easily implement, track, manage, and renew contracts is critical to maximizing revenue potential,” Dunnam wrote.

MaintenanceNet will be joining Dunnam’s global success business unit, which seeks to improve customer engagement.

MaintenanceNet CEO Scott Herron

Scott Herron

Scott Herron, MaintenanceNet’s founding CEO, said in his own blog post that MaintenanceNet “will continue to operate as we always have, with our headquarters remaining in Carlsbad.”

Herron founded MaintenanceNet in 2004, pioneering the use of analytic software to automatically generate sales for products manufacturers have sold. MaintenanceNet took no investment capital until last year, when it raised $12 million from Kayne Partners, a growth private equity investment firm in Los Angeles.

In January, Maintenance said its customer base had grown to more than $3 billion in service contracts under management worldwide. While the private company did not disclose its 2014 financial results, MaintenanceNet said its year-over-year revenue growth amounted to  50 percent in 2014, and its global reach grew to more than 300 distributors and 23,000 resellers.

MaintenanceNet has about 100 employees, according to a spokeswoman.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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