IBS Sold To Marlin

July 1, 2015 Alex Woodie

A new chapter in the saga of International Business Systems began Friday when the Swedish company announced that the California-based private equity firm Marlin Equity Partners has signed a definitive agreement to acquire IBS. Terms of the deal were not disclosed.

Once a widely respected software company with 5,000 customers running on RPG or Java versions of its IBM i-based ERP system, IBS has struggled recently. But things appear to have stabilized of late under CEO Doug Braun’s leadership. At its annual user conference in May, the company announced that it signed 200 contracts during 2014, which it said counted for “record revenue growth.”

In the press release announcing its acquisition, Marlin said IBS brings with it about 1,000 customers running across its three primary products: IBS Enterprise (which supports IBM i and Windows), the Bookmaster publishing platform, and its Dynaman warehouse management system. That’s down significantly from what IBS used to have, but apparently it’s a sign of growth for the once high-flying company.

Braun said he is excited to work with Marlin “because it will help us significantly increase our competitive advantage, and accelerate investment in our products and services to enhance our value creation for customers.” “We welcome Marlin’s broad resources and industry insights. The acquisition is good news for IBS and our customers, partners, suppliers and everyone who contributes to IBS.”

Shawn McMorran, a partner in Marlin’s London office, said the company will be working with IBS “to help grow the business organically, as well as through strategic acquisitions.”

Marlin has a history with IBM i software firms, including two acquisitions that occurred within weeks of each other in early 2007. First it bought CMS Software, the Toronto, Ontario, developer of the CMS/400 ERP system, and merged it with a UK software it had just bought, XKO Software, to create Solarsoft. Several week later Marlin bought Aldon, the provider of change management software for IBM i and other platforms.

Within years, Marlin disposed of both companies, as private equity firms are wont to do. It sold Aldon in 2011 to Rocket Software, where Aldon remains and appears to be thriving. And in 2012, Marlin sold Solarsoft to Apax Partners, the London-based private equity firm that owned Epicor Software. (A rumor that surfaced last August that Apax was set to sell Epicor to another London-based equity firm for $3 billion turned out not to be true; Apax still owns Epicor today).

Despite the claims made about Marlin’s “long-term investment strategies” and growing “long-term shareholder value” for IBS, the company clearly has a history of buying and selling IBM i software firms, not necessarily holding them for the long-term. But even if Marlin does sell IBS within four years, that would be relative stability compared to IBS’ recent past.

IBS’ troubles began when a series of restructuring efforts and write-offs in 2006 were followed with the Great Recession that began in 2008. That was the year the company decided to focus on Windows instead of IBM i as its strategic platform. In 2009, it was delisted from one NASDAQ exchange and moved to another with looser requirements. After a few rounds of musical chairs with the CEO’s seat and the board of directors, the once-proud company was sold in 2011 to California equity firm Symphony Technology Group for a song–$35 million.

A period of relative stability ensued. In 2012, IBS hired Braun, a former executive at RedPrairie (now a part of JDA Software ), as its CEO, a position Braun still holds. In late 2013, IBS launched Business Suite 2014, which included the IBM i-based ERP system and in mid-2014, it inked an exclusive deal with a Texas IT consultancy to be its distributor for the Americas.

Only time will tell if this deal works out for IBS and Marlin. We’ll have to see what plans Marlin has for the company. In the very least, it looks like IBS is getting a fresh start, which it probably deserves.

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