Iron Mountain Inc. has announced its intention to acquire a partner in the online backup and recovery market -- Marlborough, Mass.-based LiveVault Corp. The records management giant already owned 14% of LiveVault and will pay approximately $42 million for the remaining shares of the company, valuing the deal at $50 million.
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LiveVault sells disk-based online server backup and recovery services for small and mid-sized businesses and to larger companies with remote offices. Iron Mountain acquired Connected Corp., a provider of online backup and recovery for PC data, for $117 million a year ago.
According to LiveVault CEO Bob Cramer, online backup services are gaining popularity thanks to increased regulation, security and the cost and complexity of doing backup in-house. That said, service providers often have a hard job convincing customers that online backup services are cheaper than running an in-house backup operation.
"It gets down to which calculator you are using," according to John Clancy, executive vice president of the digital business unit at Iron Mountain. "A perpetual license looks cheaper than a monthly service charge but that's before you factor in the human manpower element and the expertise to do it correctly … the hosted model is growing and that's a sign that acceptance is growing."
Iron Mountain's acquisition of LiveVault follows a five-year partnership between the two companies. Iron Mountain has been selling Server Electronic Vaulting services via a license agreement with LiveVault and has served as the technology company's largest sales channel. More than 2,000 customers (between LiveVault and Iron Mountain) use the LiveVault technology to protect their servers.
Iron Mountain wants to be the "one-stop-shop for all external information protection and archiving, be that paper, tapes or electronic," said Steve Duplessie, founder and senior analyst with Enterprise Strategy Group Inc. "This is just another step along the way."
The transaction is expected to close within a few days and additional information regarding the acquisition will be provided during the company's investor day on Dec. 7, 2005.
IBM Global Services and British Telecom also resell LiveVault's service. These partners will continue according LiveVault's CEO. Other companies that sell online backup services include: Sun Microsystems Inc., (StorageTek) AmeriVault Corp., Arsenal Digital Solutions Worldwide Inc., EVault Inc. and IPR International LLC.