Newport’s IPNet Sold to Atlanta Tech Outfit
By ANDREW SIMONS
That wave of consolidation sweeping the software industry has claimed a onetime venture darling in Orange County: Newport Beach-based IPNet Solutions Inc.
Atlanta’s Inovis Inc., a privately held company whose software automates transactions between businesses and customers and suppliers, inked a deal to buy IPNet last week.
Officials at both companies declined to put a value on the acquisition.
“I can say that I’m happy with the deal,” said IPNet President Mike Simmons.
IPNet once was considered a hot company.
It fetched more than $60 million in funding from big name investors such as Mellon Ventures and Thomas Weisel Capital Partners.
Other OC names, such as Costa Mesa’s Innocal Ventures and Newport Beach’s Forrest Binkley & Brown, also backed the software maker.
In 2000, when IPNet nabbed $40 million in a single round of venture funding, industry trade magazine Computerworld picked IPNet as one of its Top 100 Emerging Companies to Watch.
But five years after it was founded, privately held IPNet has yet to really take off. It has less than $10 million in annual revenue, with Inovis posting about $100 million in yearly sales.
IPNet’s software securely links a businesses’ enterprise resource planning, electronic data interchange and supply chain management systems with those of its customers and trading partners.
The company counts several large companies among buyers of its software, including the Home Depot Inc., Kohl’s Corp. and Petco Animal Supplies Inc.
IPNet and Inovis are familiar partners, having worked together on dozens of deals in the past few years, including Home Depot and athletic shoemaker K-Swiss Inc.
A year ago, the two companies began talking about an acquisition after running into each other again and again when visiting their customers, Simmons said.
“This was actually a long time in the making,” he said.
Sales for IPNet were slow at first,due in part to fear among established companies about adopting new technology, said IPNet founder and former chief executive Donald Willis.
But Simmons said IPNet is expected to be a big growth engine for Inovis. Sales for the combined company are expected to rise 10% in the next year, officials said.
Simmons is the former chief financial officer at Platinum Software Corp.,now Irvine-based Epicor Software Corp. He replaced Willis as IPNet chief executive last year. Willis stayed on as chairman.
Inovis said it doesn’t expect to cut any of IPNet’s 60 workers.
“In fact, we’ll be investing in IPNet,” said Diane Stucky, senior vice president for Inovis.
Inovis’ acquisition comes amid consolidation in the software industry.
Irvine-based Best Software Inc. bought Portland’s Timberline Software Corp. for about $103 million a few weeks ago.
Other big deals include EMC Corp.’s pending buy of Mountain View-based Legato Systems Inc. for $1.3 billion. Legato makes database management and backup software.
And there’s Oracle’s blockbuster $6 billion bid for rival PeopleSoft Inc., which itself bought J.D. Edwards & Co. for about $1.8 billion.
The reason for many such marriages in software: grabbing a company’s customer base and cross-selling opportunities.
