Mobile IP Bonanza For Decawave Investors
Some deals are shrouded in mystery, but not so the takeover of Dublin microchip developer Decawave by US plc Qorvo in February 2020. Qorvo’s filings disclose that it paid $375m (€347m) to acquire Decawave, plus $23m (€21m) as a goodwill payment to employees who stay with the firm.
The Irish company had venture capital backing but over the years it had also received investment from hundreds of small investors. Total equity investment at the end of 2018 stood at €65m and accumulated losses were €53m. So it was an edgy ride for the private investors, who in the end made huge gains.
The tech brain behind Decawave was Michael McLaughlin (60), and the company was steered by his college buddy, CEO Ciaran Connell (60). McLaughlin established the company in 2004 and Connell joined three years later. The focus was on impulse radio ultra-wideband wireless technology, a low-power means of transmitting large amounts of data, or locating connected devices with pinpoint accuracy.
Decawave’s customer base was industrial and automotive, and turnover in 2018 was €9.2m. What prompted the Qorvo takeover bonanza was smartphone makers deciding that their latest devices require UWB capability. Based in California, Qorvo specialises in radio frequency solutions for mobile, and its largest customers are Apple and Huawei.
Decawave’s auditors had attributed zero value to the company’s intellectual property while Qorvo decided the IP value was $246m. The vendor’s net tangible assets amounted to just $300,000, and of more benefit to the acquirer was a deferred tax benefit of $21m. Goodwill on the purchase amounted to $150m.
Decawave’s share register was complicated, with most shareholdings shrouded in nominee accounts. The company had 129 million shares in issue, and after all the fundraising through the years Connell and McLaughlin owned 4.3m shares between them. However, Connell had options over 4.4m shares and presumably McLaughlin, who left the board in 2017, was on the same sort of deal. Accounts filings listed director
James O’Hara, the former Intel Ireland boss, as owning 200,000 shares and having options over 1.4m shares.
On the day the deal went down, Decawave issued 27.3m new shares as directors and staff closed out their options. If all their options had vested, it could be that the two Decawave founders shared c.€30m from the Qorvo bounty.