Earlier this week, one of my companies – EYT – announced that it had merged with ePartners. My close friend and collegue Howard Diamond was the driver of this deal and is now executive chairman of ePartners. Howard was previously the executive chairman of Rebar / Corporate Software – an investment of mine that was acquired by Level 3 in 2002.
This is a big deal for us since the resulting company – to be called ePartners – is the largest Microsoft Business Solutions (MBS) provider in North America. ePartners has over 400 employees, including 220 solution consultants, 29 offices, and is headquartered in Seattle. For those of you that don’t know anything about MBS, it’s the division of Microsoft that was formed through their acquisitions of Great Plains and Navision over the past few years and includes the Microsoft CRM product line.
MBS has recently come under scrutiny as it has underperformed expectations. Also, the Oracle / PeopleSoft DOJ trial has revealed that Microsoft considered making an investment in Peoplesoft as a potential white knight as well as considered acquiring SAP in an attempt to further its foothold in the ERP business.
While the Microsoft – Peoplesoft investment and the Microsoft – SAP acquisition are highly unlikely, Microsoft is clearly committed to MBS and the ERP market. While VC’s have not historically funded companies that provide system integration and consulting services for Microsoft’s products, there have been several companies funded in the MBS universe. The merger of EYT and ePartners combines two of them and results in the largest and best financed in North America.
I’m expecially excited about this since my history with Microsoft Business Solutions products (specifically Great Plains) dates back to 1994 when AmeriData – which had acquired my first company (Feld Technologies) – became a major Great Plains integrator. I was also on the board of SBT Accounting Systems from 1994 – 2000 which competed with Great Plains and was almost acquired by them in 2001 before being acquired by Computer Associates. Finally, my partner Heidi Roizen was on the Great Plains board from 1998 – 2002 and was very involved in the Microsoft acquisition of Great Plains. I orginally invested in EYT in 2000 and – while it has been a twisty road through the bursting of the Internet bubble, I’m very pleased with where we are today and proud of the people that have helped get us here.