With $637 million in the bank and cash flow remaining strong, Business Objects (NASDAQ:BOBJ) opened its checkbook this week, shelling out $300 million for enterprise-software provider Cartesis. Management says similar deals will likely follow, helping to maintain Business Objects' growth rate.

The company develops business intelligence software that helps companies make better decisions by generating useful reports from their piles of data. Business seems to be booming. Business Objects' fiscal first-quarter revenue increased 20% to $334 million, while license revenue rose 9% to $137 million. The company added 1,200 new customers in the quarter, bringing its total to more than 43,000.

Unfortunately, net income fell from $0.13 to $0.06 per share year over year, wounded in part by a $26 million charge for an adverse legal judgment in Business Objects' patent fight with Informatica (NASDAQ:INFA).

As the company gets bigger, continued growth becomes increasingly difficult. To compensate, the company plans to launch several new products aimed at middle-market customers. The Cartesis deal should provide another boost, giving Business Objects an additional $125 million in annual revenue, 1,300 customers, and a foot in the door at the large financial reporting market.

Based on its 2007 guidance, Business Objects is valued at about 2.2 times revenue. For comparison, Oracle (NASDAQ:ORCL) bought Hyperion for 3.4 times revenue, while rival Cognos (NASDAQ:COGN) trades at a 3.1 multiple. With its acquisitions gaining critical mass and momentum from the middle market, Business Objects looks relatively undervalued.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 3,449 out of 27,827 in CAPS. The Fool has a disclosure policy.