On Wednesday, IBM announced that it had acquired DataPower. Bill Burnham (who originally did the investment for us when he was at Mobius) has a nice set of posts on his view of VC lessons from the deal and his view of the implications for software in general.
After Bill left Mobius, Gary Rieschel and Robin Bordoli took over responsibility for the company in our shop. I got actively involved earlier this year (and eventually joined the board) when IBM made its initial overture to the company. In 2004, IBM acquired Cyanea, another deal that Bill sourced that I took over after he left Mobius. I spent a silly (large) amount of time last summer working on that deal and, while we were very happy with the outcome (as was IBM), the process and negotiation was brutal. As a result, when the first overture came this time around it was logical for me to get involved.
The dance – as with many deals – took a while to get to the point where both sides were serious. IBM and DataPower had a good business relationship that was developing nicely and – while IBM was very interested in the company – DataPower was well capitalized and growing like crazy. At some point, IBM made an attractive enough offer and the real dance began.
This time around, it was much easier. The IBM lead negotiator was the same person as on the Cyanea deal – as a result we were jointly able to establish a very effective approach to the negotiation early in the process. We had great M&A support on the DataPower side from both Steve Tonsfeldt at Heller Ehrman who has now done six deals with IBM in the past few years and Steve Cheheyl – previously EVP Operations at Bay Networks and CFO for three companies that went public (Applicon, Alliant, and Wellfleet) – who is now a consultant that helps on things like this (e.g. he was the principle negotiator and ringleader on our side of the deal.) Dave Gammell and his team from Brown Rudnick also carried a huge amount of water on the deal.
Of course, the company wouldn’t exist without the incredible entrepreneurial, technical talent, and energy of Eugene Kuznetsov (the founder, chairman, and CTO), the steady hand and leadership of Jim Ricotta (the CEO), and the balance of their great team. Congrats to all.