Summit Partners Acquires Control Of Help/Systems–Again

April 23, 2012 Timothy Prickett Morgan

“In the private equity world, you rarely double in on a company,” explains Mark Ties, chief financial officer at Help/Systems, the maker of automation tools for IBM i, Unix, Linux, and Windows platforms. But doubling in, as Ties called it, is precisely what private equity giant Summit Partners did on April 17 when it bought the majority stake control of Help/Systems.

Summit Partners was founded in 1984 and has raised more than $14 billion in capital from investors in those ensuing 28 years, which has been invested in more than 340 companies in North America, Europe, and Asia. Of the companies, 125 have gone public after getting cash infusions to boost their growth or to do acquisitions–sometimes both. Summit Partners has done more than 130 strategic sales or mergers of companies it controlled since it was founded. It is one of the heavy hitters in the software racket, with McAfee (now part of Intel) and RightNow Technologies and Hyperion Solutions (both now part of Oracle) having gotten their cash fuel for growth from Summit Partners. Public and corporate pension funds have been the main source of equity for Summit Partners, which uses the cash to buy minority stakes or controlling majority stakes in companies that it can then sell for a larger pile of cash or take public. The idea is that private equity investing yields better than investing in the stock market can. (It’s hard to argue that one, if you look at your 401(k) plan lately.)

More recently and closer to the IBM i home, Summit Partners has been investing in application software provider Infor At the end of March, Golden Gate Capital, which is the majority investor in Infor, and Summit Partners kicked in some dough to raise money for the software company to fuel its own ambitions as well as finish off the acquisition of Lawson Software by rejiggering its debts.

By investing in Infor and Help/Systems, Summit Partners is clearly making a statement about its aspirations for software in general and the IBM midrange market in particular, which is an amalgam of different platforms these days. It is no coincidence that both Infor and Help/Systems have software that supports all four key platforms in the midrange: IBM i, Unix, Windows, and Linux.

Summit Partners first bought a controlling stake in Help/Systems, which has been making tools for the IBM midrange since the System/3X days, back in 2005, although very few people knew it at the time. In October 2006, it was Summit Partners that backed the acquisition of Advanced Systems Concepts by Help/Systems, a maker of the SEQUEL data access tools for OS/400 and i platforms, although we did not know it at the time. The fact that Summit Partners owned Help/Systems (along with Help/Systems management, who still have skin in the game even today) was not made apparent until Audax Group, another private equity firm, bought out Summit Partner’s stake in Help/Systems in the fall of 2007.

It was Audax Group that then funded acquisitions by HelpSystems, including buying OS/400 and i security software vendor PowerTech in August 2008 and quickly following that up with a deal to take over security and management tool maker Bytware in October 2008.

Help/Systems has made no secret that it wants to expand its presence in the Unix, Windows, and Linux markets, and has created a separate company, called Skybot Software to peddle an automated job scheduler for Unix, Windows, and Linux platforms that has its history in the Robot/38 automated job scheduler that company founder Dick Jacobson started selling for the System/38 back in 1982. Today, Help/Systems has 160 employees, operates in nine locations around the world, and has 5,100 customers–and is arguably one of the largest software companies in the IBM i market. (The ranking is probably the IBM i parts of Infor, the JDE unit of Oracle, and then either HA software maker Vision Solutions or Help/Systems. But I am guessing.)

“We are excited about this partnership with Summit Partners,” Janet Dryer, CEO at Help/Systems since 2007, said in a statement announcing the deal. “Summit’s broad base of software and global expertise will help us continue to expand our products and services on the global stage. We look forward to Summit’s guidance and contributions in taking our company to the next level of growth.”

By the way, neither Audax Group nor the members of the management team at Help/Systems that has investment stakes in Help/Systems have cashed out. According to Ties, Audax is retaining a minority stake and so are those Help/Systems managers, although he was not at liberty to say what size stakes everyone has. What Ties can confirm is that Summit Partners is buying enough of the Audax Group stake to take control of Help/Systems, through funding that came from a combination of equity and debt, and has in place the funding mechanisms to pump more cash in Help/Systems to grow the business and do more acquisitions when they are appropriate.

John Carroll and JJ Cardwell, managing directors at Summit Partners, as well as Peter Rottier, a principal at the firm, will be joining the board of directors at Help/Systems in conjunction with the equity investment.