Bytware Bought by Help/Systems and Audax

October 6, 2008 Alex Woodie

IT Jungle has confirmed that Help/Systems and its private equity backer, the Audax Group, have acquired Bytware, the developer of security and management tools for the i OS platform. The purchase, for which the companies plan no formal announcement, comes just a month after the combination of Help/Systems and Audax snapped up i OS security tool vendor PowerTech, and lays the groundwork for more acquisitions in the months ahead.

A tip from an IT Jungle reader prompted Help/Systems to confirm speculation that the privately held Reno, Nevada, company had become the latest i OS software vendor to be bought by the suddenly acquisitive group. “I can’t deny it,” replied Tom Huntington, the vendor’s vice president of technical services, when presented with the rumor.

Huntington said the company does not plan to formally announce the transaction through a press release or other means. This is the same low-key approach that Help/Systems and Audax used last month with the acquisition of PowerTech. That story was first reported in a Boston-area trade journal before IT Jungle, acting on another reader e-mail, broke the news to the IBM i marketplace.

Asked whether Bytware customers were being informed of the acquisition or whether they would first learn about it in the press, Huntington said there was some customer outreach occurring. However, it’s doubtful whether Bytware customers would be notified before the news leaks out. PowerTech customers were reportedly irritated that they were not informed of the sale to Help/Systems and Audax last month before the news broke.

The justification for giving little notice to the transaction is that Bytware, like PowerTech, will continue to operate as an independent company, without any major operational changes following the acquisition by Help/Systems, Huntington says.

Bytware provides i OS software and services. The company’s main products include a native i OS antivirus product called StandGuard Anti-Virus, which was co-developed with McAfee more than five years ago at the urging of IBM Rochester; an exit point security tool called StandGuard Network Security; and an automated monitoring and management product called Messenger. PeekPlus, a user monitoring tool, and StandGuard Recycle Bin round out the product lineup.

There’s considerable overlap in the i OS product sets between Bytware, PowerTech, and Help/Systems. PowerTech arguably is the strongest, most active vendor in the i OS security space, with a collection of products aimed at alleviating a range of common (and not-so-common) security concerns. Help/Systems’ strength is its integrated suite of systems management tools, which includes a job scheduler, backup, message monitoring and management, LPAR management, disk management, performance tuning, report distribution, and others. It also sells a reporting and business intelligence tool, called SEQUEL, which it obtained with its acquisition of Advanced Systems Concepts in October 2006 (a year before Audax Group acquired Help/Systems from another equity firm).

Ironically, Help/Systems recently introduced an exit point security tool, called Robot/SECURITY. With the acquisition of Bytware, it now has three exit point monitoring tools. The Bytware buy also creates overlap in the message monitoring and management department.

The one product area that Bytware had practically all to itself–and which was likely one of the main reasons that Help/Systems and Audax bought the company–was Bytware’s native i OS antivirus product.

StandGuard Anti-Virus has reportedly been a big seller for Bytware over the years, especially as companies become more concerned about security and the i OS platform’s susceptibility to Windows viruses. While i OS is highly virus resistant, and the likelihood of Windows malware doing any damage i OS-resident data is remote at best (but not impossible, security experts say), the System i’s Windows-like file system, the IFS, can become infested with Windows malware and serve to infect and re-infect Windows PCs attached to the System i server. One other security company has ported an open source antivirus product to i OS, but Bytware, with the backing of McAfee and its support and documentation, appears to have a lead in this area.

Heading up the i OS vendor consolidation for the Audax Group is Edward Feuerstein, who holds the title of principal, business development. He was out of the office last Monday as we were going to press and was not be reachable until later in the week, a representative with the company said.

The Audax Group targets relatively obscure midmarket companies in a variety of industries. The Boston-based company operates two equity investment divisions, including Audax Private Equity, which has more than $3 billion invested in 32 companies such as Help/Systems, Mini-Skool Early Learning Centers, and Winchester Electronics; and Audax Mezzanine, which invests in subordinated debt and junior securities of companies, and has 28 clients, such as Taylor-Wharton International, The Crom Corporation, and The Hilsinger Company.

Considering the hush-hush nature of the recent acquisitions executed by Help/Systems and Audax Group, is it possible that other acquisitions have been done in secret, and will come out of the woodwork in the months to come? Good question, says Huntington, who is limited in what he can say to the press. But no, there haven’t been any other acquisitions in the past, he says.

But the future is wide open. “IBM i customers can continue to expect more things from us,” Huntington says, in response to a question about the possibility of further acquisitions.

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