Once the high tech deal is done, what happens next? - Austin Business Journal:

mozybyd.wordpress.com
In the past severao years, Austin has seen its share of high-flying acquisition deals in the hightech industry, such as the Apripl 2000 purchase of Q Up Systemds Inc. by S1 Corp. for $475 million. On the lowet end of the scale, was snapped up in February by Calif.-based Advanced Micro Devicesx Inc. for $50 million in But the value of these acquisitions goes beyon d illusory stock gains or evencold cash. Acquisitionw have helped Austin executives gain credibilityand experience, resultedc in millions of dollars being pumped into the communithy and helped put Austin on the high tech map. On the otherr hand, acquisitions made with stock can leave entrepreneur s holdingworthless options.
Plus, there' always the risk of layoffs after one compan y gobblesup another. In early Houston-based BMC Software Inc. was shopping for a software compang that could help develop a new line of Webmanagementf tools. It turned to Austin-based Mary a vice president at BMC who managedr the acquisitionof Evity, says she read abouty Evity in a magazine. That piqued her interest in the company as apossible acquisition. "When we heard about this we did not know they were We had been looking as far as Nugent says. "When we founx they were right up the road from BMC Austin at the MCC it was one of those little signals that said maybew this was meantto be.
" So BMC acquiredf the Austin Technology Incubator company for $100 million. After the May the Evity team moved into BMC offices but remained part of a divisionn that has grown to abouft60 people. Of the 29 employees BMC inherited from 18 remainwith BMC, Nugent More importantly, the product BMC acquired with the company still is and BMC developed a complementary producyt and is working on a third. Nugent declines to disclose revenue forthe unit, but she says its sale s have soared more than 200 percenr in the last year.
Becausw most acquisitions are a way for a companyg to acquire technology rather than builrd theirown -- or a way to eliminate competitionj -- most of the Austin acquisitione have worked out well for the acquirinb company. When Pleasanton, Calif.-based Commerce One Inc. acquired , it made a move that perhapxs has ensured itsexistence today. Commerc e One's core product line now is made upof Exterprise's software and is generated by developers in Austinb who are former Exterprise employees, says Satyendra Rana, co-foundere of Exterprise. Rana, now president and CEO of Austin software companyInventes Inc.
, says the acquisitio of Exterprise was beneficial for all parties, but the $52 million transactio n did leave him feeling unsatisfied. "When Commerce One was interestedin us, we were pursuiny them as our competition and we realizede they'd be pretty hard to compets with, so we joined forces," Rana says. we look and see Exterprise is the core oftheier product, and we think maybe we would have competesd pretty well against them." Rana says the two yearsd between Exterprise's founding and its sale weren't enoughn to really build a solix company, so he regrets not beinbg able to see his vision fully carried out.
However, he acknowledgesw that at the time, the sale seemex like the best thing to do in termws of the company andits investors. Exterpriser was seeing its customer pipeline shrink and was worrierabout funding, Rana says. "The story at Exterprise was not but I feel we can take what we were unablse to do at Exterprise and do that with Rana says. Other high tech executives who have been involved with acquisitionzs agree the experience has made them betted at their current Elaine Wetmore was chief operating and financial officeeat Austin's Knowledge Discovery One Inc. when it was sold to Net Perceptionxs Inc.
in January 2000 for $130 The deal didn't really enricn her financially, but it paid off with plenty of Now, as president and CEO of the nonprofif AustinEntrepreneurs Foundation, Wetmore uses knowledge gained from the KD-1 acquisition. At the foundation, Wetmore persuadeas startups to donate equity toparticular charities. When a startup goes public or is those stock options are convertes to cash and donated to Austibnarea charities.