On August 12, 2008, Return Path announced that it will buy Habeas.

This report looks at the purchase and its implications. It is addressed at two constituencies:

• It helps CEOs and business development staff understand how to optimize their company value and design a successful acquisition strategy through understanding the experience of others. It also helps them develop the cost justification for the acquiror.
• It helps investors determine whether the effect of the merger is constructive or not, from the investment standpoint.

Topics include:

• About Return Path, and how the acquisition benefits Return Path
• About Habeas, and why it had to be sold
• Terms of the deal: price paid, price/revenue ratio, impact on common and preferred shares
• Key statistics about Habeas that were relevant to the deal valuation, including revenues and income/loss history, profitability, and funding history
• Survey of comparable deals, including price paid
• Threats to the success of the acquisition

Much of the information presented here is not publicly available. Our off-the-record sources in reports such as these include stockholders, present and past company employees, present and past board members, and people who have participated in confidential meetings with the vendors concerned.

Report 787. 4 pages.