A local software success story that doubled in size a few years ago by acquiring a California-based competitor has now been purchased by another U.S. firm, making millionaires out of some of its employees.
Emerging Information Systems Inc. (EISI), a 21-year-old firm with more than 200 employees in Winnipeg, has been purchased by Milwaukee-based software developer Zywave Inc. for an undisclosed sum.
EISI founder and CEO Mark Evans said the deal, expected to close within 30 days, will not only create new growth opportunities for EISI, but will make some of its employees rich.
Evans said nearly 200 current and former employees own shares in the company, including a handful who have been with the firm since its inception.
"A good set of people are going to realize a nice gain on this deal. There are going to be several millionaires and a bunch of people that will get $100,000 or more," he said, although he wouldn't say how many.
EISI is the second homegrown specialty software developer to be purchased by a U.S. company this year. In March, Tell Us About Us, a 14-year-old customer-feedback firm, was acquired by Denver-based Market Force Information, a leader in customer intelligence solutions and the world's largest mystery shopping company.
Kathy Knight, CEO of the Information and Communication Technologies Association of Manitoba, said she's not surprised to see U.S. firms snapping up local software developers.
"It shows and demonstrates that we have some real strength in this area," Knight said. "And it (EISI) is such a successful company, so it would be highly desirable."
She noted Market Force not only left TUAU's operations in Winnipeg, but said it plans to grow its software-development operations here. Hopefully the same will happen with EISI, she said.
Evans dismissed any concerns EISI's Winnipeg operations will be moved to the United States, or that a lot of local jobs will be lost.
He said it was EISI that initiated the search for a new equity partner after its majority owner -- Toronto-based Birch Hill Equity Partners -- said it wanted to sell its stake in the firm.
He said there were a number of interested buyers, and EISI's executive team wouldn't have struck a deal with anyone who intended to move the operation out of Winnipeg.
He said Zywave is about the same size as EISI and is committed to growing EISI's business.
"Based on that, I think you can infer there won't be a lot of disruption to operations."
Evans conceded these kinds of mergers often result in people leaving, either by choice or because their jobs are being eliminated. But if that happens in this case, he expects it to involve fewer than 10 people.
Zywave officials declined an interview request on Monday, saying they won't comment until after the deal is closed.
In a press release announcing the acquisition, Zywave founder and CEO Bill Haack said, "We admire EISI's expertise and demonstrated ability to deliver and support tailored solutions that have made them the technology partner of choice in the financial advisory industry. We look forward to combining our capabilities to support our clients' ever-evolving business needs."
Although both companies are software developers, most of EISI's products are designed for the financial-planning industry in North America, while Zywave's are designed for the insurance brokerage business.
But Evans said Zywave also has some generic products EISI customers can use and vice-versa. They also have products that compliment one another, so there will be opportunities to work together to grow their sales.
Evans said it will be a couple more weeks before details of the merger are completed, including whether EISI will keep its name. EISI is North America's largest provider of needs-assessment and financial-planning software, with more than 250,000 customers. It's blue chip customers include 11 of the continent's top 25 banks, 17 of its top 25 brokers, three of the top five Canadian insurance companies and seven of the 10 largest U.S. life insurance companies.