Nuance Communications bought SpinVox for $102.5M which was a combined $66M in cash and $36.5M in stock. This purchase was a steep decrease from the rumored $150M Nuance was considering, and an especially low amount when compared to the roughly $200M already invested in the company.

Was this a good strategic move?

SpinVox has received a lot of hype over the years and the current economic conditions have helped bring to light the company’s shortcomings. The discussions of a possible IPO and $500M valuation gave way in the recent downturn. Since SpinVox has some high profile customers and technology that, in theory, could be integrated with Nuance’s software, this acquisition could turn out well for Nuance. However, a concern arises when reviewing SpinVox’s competitors and threats. Nuance might have still overpaid.

How will Nuance use this acquisition?

On the basic level Nuance can take SpinVox’s existing customers and continue to provide voice-to-text services while trying to up sell these customers additional products and services. There’s a comforting feeling knowing that human capital is used to ensure one’s services are functioning properly, albeit not very sexy.

On the technologic front, if SpinVox has amassed an extensive knowledge of speech recognition than that could create some real value for Nuance and help them both further refine and enhance their existing product line as well as capture more market share and expand their reach into similar services.

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