ANN ARBOR ? The purchase of Arbortext for $190 million in cash by Product Development Company (PTC) in July is one of the largest exits for any Michigan technology company so far, although the benchmark remains the $1.3 billion purchase two years ago of Esperion by Pfizer.
The deal certainly didn?t hurt North Coast Technology Partners either. The Ann Arbor venture capital firm invested about $4 million during several rounds over a half dozen years, earning its investors just under 10 percent of Arbortext?s payout when the company was sold to PTC. When you do the math, North Coast?s share was close to $19 million.
?We were an original threshold investor in Arbortext,?? said North Coast Co-Founder Hugo Braun, who served on Arbortext?s board. Other key investors included Norwest Venture Capital, Access Ventures and Invesco Private Capital.
Braun said PTC decided to purchase Arbortext after getting to know the Dynamic Enterprise Publishing company through a year-long business partnership. Arbortext automates the publishing process through its XML-based technology, which lets clients build a single media-neutral source of information that can be automatically assembled and published for any audience on any medium.
?We were not looking for a partner,?? he said. ?From our standpoint, we wanted to build a business that gave a great value proposition for our customers.?
Another important aspect is the deal itself and how the sale validates what can be done in Michigan and the Midwest, Braun said.
?Arbortext has strong technology, we were very patient, and this exit ranks right up there with the best,?? he said. ?PTC plans to leave 95 percent of the Arbortext operation here and in fact grow it. They put a high value on the quality of the programmers at Arbortext.?
Arbortext has about 240 employees and 1,700 customers worldwide in multiple industries, including discrete manufacturing, life sciences, financial services, insurance, publishing and government. Arbortext did about $40 million in revenue for the twelve months ended June 30.
Parent company PTC grossed about $700 million in the 12 months ended July 2. The company provides Product Lifecycle Management (PLM) software solutions to more than 35,000 companies worldwide, including manufacturers in aerospace and defense, automotive, consumer, electronics and technology, industrial equipment and medical products industries.
PTC officials said the company will be uniquely positioned to enable customers to create, manage and dynamically publish critical information concurrently with the development of related products or services, improving time-to-market, quality, cost and customer satisfaction.
?The powerful combination of PTC and Arbortext will enable the delivery of the industry?s first turnkey solution for creating and managing a single source of product and service information, and then configuring and publishing that information dynamically for a variety of downstream uses,? said Jim Heppelmann, executive vice president and chief product officer of PTC.
?Arbortext?s technology fits well with PTC?s product development system, enabling full information associativity throughout the product lifecycle, Heppelmann said. ?At the same time, PTC will leverage the openness and flexibility inherent in our solutions to work with a variety of information sources, content management solutions and other enterprise applications.?
Former Arbortext CEO Ray Schiavone, who joined the company four years ago after serving as President of TPN Register LLC ? a joint venture between General Electric?s Global Exchange Service and Thomas Publishing, said when Arbortext looked at the landscape, the best opportunity for growth was through partnering. It was just a question of which partner.
?We had discussions with other groups,? Schiavone said. ?We liked the category of product lifecycle management and looked at the leaders in that area. We went with PTC. All the stars were aligned. Customers were asking for better integration as well.?
Schiavone said he wrapped up his transition team responsibilities at Arbortext in October. He?s taking a long earned break to be with his family for the Holidays. But come January, he needs to find another job.
He?d like to stay in Ann Arbor ? a city he had never heard of when he was recruited from the East Coast. But so far he hasn?t received any job offers in Michigan.
?I?m hearing from the West Coast, from Silicon Valley, from Boston, but nothing yet here,?? he said. ?My family and I really like it in Ann Arbor and would like to stay. But with my children still young, we can move elsewhere if we have to. We hope that won?t become the case.?
