PowerTech Acquired by Help/Systems, Private Equity Firm
August 18, 2008 Alex Woodie
The consolidation of the midrange continued last month when The PowerTech Group, a leading developer of i OS security software, was acquired by Help/Systems and Audax Group, the private equity group backing the i OS utility developer. Few details of the deal are being released, as the companies are privately held and therefore under no obligation to spill the nitty gritty. What is known is that PowerTech will continue to function as a completely independent entity.
By all indications, PowerTech has become a powerhouse of i OS security software this decade. Whereas many of its competitors had been acquired by large firms with nary a new product release to be heard of again, PowerTech’s 800 customers have been treated to a steady diet of new products and upgrades, integration with third-party products, the industry’s only i OS-focused conference, annual “state of security” reports, and numerous white papers, educational events, and Webinars. PowerTech customers could feel safe in the fact that PowerTech lived and breathed i OS security, and were active in the midrange community.
In this respect, the acquisition by another highly visible, true blue i OS software vendor–Help/Systems–is not entirely surprising. Based in Eden Prairie, Minnesota, Help/Systems is best known for its Robot suite of tools, including the popular Robot/SAVE backup utility and Robot/SCHEDULE job scheduler. Ironically, Help/Systems launched its own security software suite that competes directly with PowerTech exactly a year ago. Robot/SECURITY includes an integrated collection of network security, auditing, user profile swapping, and forensics analysis components–all of which are functions PowerTech already offered.
Help/Systems made its first major acquisition in 2006, when it bought Advanced Systems Concepts (ASC), a developer of reporting and business intelligence tools for the i OS platform. A year later, Help/Systems itself was acquired by the Audax Group, a venture group based in New York and Boston that seeks to invest its $4 billion in capital into middle market companies. For each acquisition or investment, Audax identifies “add-ons,” or additional acquisitions or investments, that can augment or improve existing assets. The acquisition of PowerTech is one such add-on for Help/Systems’ ownership. Prior to the Audax acquisition of Help/Systems, the company was owned by another private equity firm, Summit Partners–a deal that was not announced when it occurred in 2005.
Officially, Audax acquired PowerTech from the two private equity firms groups that owned PowerTech, Bluestem Capital and SeaPoint Ventures, which made equity investments in PowerTech when times were tough back in early 2002. Very few people in the midrange knew that PowerTech was owned by private equity firms. (We certainly didn’t know.) Terms of the PowerTech deal were not disclosed.
In fact, little information about the deal is available, which is apparently how all the players prefer to keep it. There is no mention of the acquisition on the Web sites of any of the companies involved. The only way IT Jungle became aware of the story was a reader tip pointing us to a short story on www.thedealmaker.org, an online Boston business publication, which pegged the deal happening on July 31.
Reached on his vacation, Tom Huntington, Help/Systems vice president of technical services, provided this rationale for keeping mum about the deal. “We do not plan a press release on the deal since we plan to keep PowerTech company focused ‘as is’ in the security space,” he says. Pressed to explain why the deal makes sense, Huntington said: “We firmly believe in the security product. The customers are going to obviously benefit by having a great choice in security for System i, and the support that Help/Systems brings to the table, and international distribution channels that we have. So those are some of the benefits.”
There are some of the usual unanswered questions with the PowerTech deal that any merger or acquisition brings up in terms of product lines and people. What will happen to Robot/SECURITY now that Help/Systems owns one of the most robust suites of i OS security tools on the market? Besides the sharing of customer support and international sales channels, will there be any additional synergies, such as collaboration among development teams, integration of products, or shared back office functions (such as accounting and payroll)? Will there be any staff reductions as a result of the deal? PowerTech has been operating without a chief executive officer since Jon Scott left earlier this year. But what happens to other PowerTech employees? And, finally, what might be next on the acquisition list for Help/Systems? There are lots of interesting possibilities. . . .