‘New’ Infor’s Cloudy IPO Picture
May 7, 2012 Alex Woodie
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Will the “new” Infor go public, or will it not? There are indications both ways. The location of its new headquarters, which is currently under construction a few blocks from Wall Street, sure seems to say yes. But a recent equity investment by Summit Partners casts some doubt on an initial public offering by Infor. Infor was well on its way to an IPO of stock several years ago, former CEO Jim Schaper confirmed in press interviews. However, the economy imploded in late 2007, causing companies of all stripes to hunker down to weather the downturn in the hopes of coming out alive on the other side. We’re now coming out the other side of the Great Recession. Some of us are still alive and enjoying an economic recovery–albeit a slow one here in the United States. Like many companies, Infor is in the midst of massive transformation to prepare it to take advantage of new technologies–such as mobile, cloud computing, and analytic software–that businesses are widely expected to adopt to make them more nimble and competitive in our rapidly changing world. Much of Infor’s transformation and the company’s new technologies were on display at the recent Inforum 2012 conference in Denver, Colorado, the first company-wide user conference in four years. The show was conceived as a coming out party for the “new” Infor. On multiple occasions, CEO Charles Phillips, the chief architect of the company’s transformation, referred to Infor as a startup. Of course, Infor isn’t a startup. It’s an amalgamation of dozens of tech companies that it has acquired over the years. Many of these tech companies sold software applications that are widely to be considered “legacy” products, including most of the IBM i-related acquisitions like MAPICS, SSA BPCS, Geac System21, Infinium (Software 2000), and Intentia Movex, not to mention the often-hated Baan, the heavily COBOL-co-dependent Lawson S3, and sundry other Unix and Windows products. What Phillips meant when he said Infor was a startup was that the company is adopting the mentality of a startup. Startups move quickly to adapt to changing business conditions. The problem for Infor is that, unlike a startup, it has an extensive legacy to uphold. Startups, of course, have no legacies, have no responsibility to support older products, and are free to invest heavily in creating future products. Besides, Infor really doesn’t really want to be a true startup, because it likes having a legacy, and actually touts the true benefit of having a legacy. That is, Infor has oodles of business logic that’s been battle-tested in numerous industries and “micro-verticals” (to use an Infor term). Infor is lining its collection of specialized software up against the “one size fits all” approach of SAP and (to a lesser extent) Oracle. That doesn’t mean that Infor can’t emulate a startup. It has hired 600 new engineers, rolled out an impressive array of new products, and has a roadmap filled with promising technology. This all meshes well with Infor’s new Lightning McQueen-esque motto: Speed. (Even though Infor customer Ferrari was featured prominently at Inforum, perhaps the McQueen phrase “Float like a Cadillac, sting like a Beamer” will find its way into the new Infor’s lexicon.) The other important aspect of being a startup is the need to raise capital, and that’s what brings us to whether Infor will go public. As mentioned earlier, the fact that the company is moving its headquarters from Atlanta, Georgia to the heart of New York City can be seen as a harbinger of going public. If nothing else, the prominent new HQ will make the company much more visible to the public and the press. In an executive show and tell with press and analysts at the Inforum 2012 show, Phillips cringed at the session’s last question, which was basically whether Infor will do an IPO (he thought he had escaped that one). Phillips didn’t definitely answer it either way, but indicated that it was a possibility. Representatives from Infor’s two majority stakeholders, the private equity funds Golden Gate Capital and Summit Partners, which just recently bought a stake in conjunction with the the finalization of the Lawson acquisition, also took a stab at the question. CJ Fitzgerald, a managing director with Summit Partners and now a director on Infor’s board, indicated that his firm typically makes long-term investments. “We’re here to be supportive over the long haul,” he said. Prescott Ashe, a managing director with Golden Gate Capital, also put a damper on IPO speculation. He described Gold Gate Capital as an evergreen fund, a sort of “private Berkshire Hathaway,” a reference to the legendary investment prowess of Warren Buffett, whose strategy of buying undervalued companies and holding onto them for a long time has resulted in massive profits. In any event, while Infor’s equity is privately held, its debt is public, Phillips told the audience. So while anybody can purchase an IOU with Infor’s name on it, not everybody can get a stake in the company itself. For now, anyway. 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