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EXHIBIT 99.2
May 20, 2000
Board of Directors
Active Software, Inc.
3333 Octavius Drive
Santa Clara, CA 95054
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, par value $0.001 per
share (the "Shares"), of Active Software, Inc. (the "Company") of the exchange
ratio of 0.527 shares of Common Stock, par value $0.01 per share (the
"webMethods Common Stock"), of webMethods, Inc. ("webMethods") to be received
for each Share (the "Exchange Ratio") pursuant to the Agreement and Plan of
Merger, dated as of May 20, 2000, among webMethods, AW Acquisition, Inc., a
wholly-owned subsidiary of webMethods, and the Company (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as managing underwriter of a public
offering of 3,500,000 Shares in August 1999, and having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Agreement. Goldman, Sachs & Co. provides a full
range of financial advisory and securities services and, in the course of its
normal trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of the Company or webMethods for
its own account and for the accounts of customers. As of the date hereof,
Goldman, Sachs & Co. and certain investment funds affiliated with Goldman, Sachs
& Co. hold 1,816,758 shares of webMethods Common Stock.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Annual Report on Form 10-K of the Company for the year ended
December 31, 1999; the Registration Statement on Form S-1 of the Company,
including the Prospectus contained therein dated August 12,
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Board of Directors
May 20, 2000
Page 2
1999; the Registration Statement on Form S-1 of webMethods, including the
Prospectus contained therein dated February 10, 2000; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company and webMethods to their respective stockholders;
and certain internal financial analyses and forecasts for the Company and
webMethods prepared by their respective managements, including certain operating
synergies projected by the managements of the Company and webMethods to result
from the transaction contemplated by the Agreement (the "Synergies"). We also
have held discussions with members of the senior managements of the Company and
webMethods regarding their assessment of the strategic rationale for, and the
potential benefits of, the transaction contemplated by the Agreement and the
past and current business operations, financial condition and future prospects
of their respective companies. In addition, we have reviewed the reported price
and trading activity for the Shares and the webMethods Common Stock, which like
many Internet related stocks have been and are likely to continue to be subject
to significant short-term price and trading volatility, compared certain
financial and stock market information for the Company and webMethods with
similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the software industry specifically and in other industries
generally and performed such other studies and analyses as we considered
appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. In that
regard, we have assumed with your consent that the Synergies have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the Company and webMethods. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or webMethods or any of their subsidiaries and we have not been furnished with
any such evaluation or appraisal. We have assumed with your consent that the
transaction contemplated by the Agreement will be accounted for as a pooling of
interests under generally accepted accounting principles. We were not requested
to solicit, and did not solicit, interest from other parties with respect to an
acquisition of or other business combination with the Company. Our advisory
services and the opinion expressed herein are provided for the information and
assistance of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated by the Agreement and such opinion
does not constitute a recommendation as to how any holder of Shares should vote
with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Shares.
Very truly yours,
(GOLDMAN, SACHS & CO.)
