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Corporate Acquisitions in the Upper Valley

In the last year-and-a-half, four companies in the Upper Valley have been acquired in deals altogether worth more than $900M. All of this M&A activity led The Valley News to suggest that "Recent Deals Show Upper Valley Emerging as High-Tech Incubator." Are they correct?

The biggest deal occurred in March 2006 when Ansys (Nasdaq: ANSS) acquired Fluent for $573M in a stock and cash deal. Fluent was itself spun out of Creare, another Upper Valley company, in 1988. The subsequent years saw Fluent being acquired by Aavid Thermal Technologies, Inc., a Laconia, New Hampshire-based company. Aavid went public in 1996, acquired several companies, and then went private after being acquired by a private equity buyer, Willis Stein & Partners. Throughout its history, Fluent has remained in the Upper Valley and is expected to remain here after the Ansys acquisition. Ansys is a global innovator of simulation software and technologies designed to optimize product development processes, and Fluent Inc. is a global provider of computer-aided engineering (CAE) simulation software.

Similar in deal size, Glycofi was acquired by the giant pharmaceutical company, Merck, in May 2006 for $400M in cash. Glycofi focuses on genetically altering yeast cells so they can produce useful human proteins. The name of the company comes from GlycoFi ’s ability to optimize the exact sugar (glycan) structure of a given therapeutic protein, which can dramatically improve the pharmaceutical attributes of a drug and enhance its therapeutic profile. The company, which was founded in the halls of the Thayer School of Engineering at Dartmouth, was co-founded by two Thayer faculty members: Charles Hutchinson, former Dean of the Thayer School, and Associate Professer Tillman Gerngross. The company will remain headquartered in Lebanon, NH, after the acquisition by Merck.

Last Spring, Novell acquired longtime Upper Valley software provider Tally Systems in deal estimated to be about $22M. Tally, which had struggled during the post-2000 downturn, is maintaining an Upper Valley presence with approximately 32 employees in Centerra.

The most recent acquisition occurred in late July 2006 when Fuji Photo Film Company acquired Dimatix, which was previously known as Spectra. Terms of the deal were not disclosed. Dimatix began more than 25 years ago and currently has some 300 employees, 250 of which are located in the Upper Valley. Like Fluent, Dimatix/Spectra was a spinout from Crearer Inc. It was founded and led by Robert Rosenblum '73, T'75, until very recently was its CEO, too. In 1991, Markem Corporation (which itself has Dartmouth roots, and will be the subject of an upcoming post) acquired the company but kept the Spectra name. In 2005, Spectra changed its name to Dimtix, relocated its headquarters to Silicon Valley, and recruited a new CEO to position the company for sale or acquisition.

So, nearly a billion dollars later, is the Upper Valley the next place to be for emerging companies? Certainly some of the elements are here to suggest that companies with solid technology, management, and execution can attract the capital to start and grow into significant entities. Over the coming weeks, we will look at some of the infrastructure that's emerged, particularly in the last five years, to support this growth and to enable the next generation of acquisitions to occur.

The NH/Upper Valley Advantage?

During the Spring and Summer of 2006, a few of signs arose that suggest that New Hampshire, and the Upper Valley in particular, might be acquiring some strength in terms economic competitiveness, particularly around new and growth-oriented businesses.

The first news came from The New England Economic Partnership, a non-profit organization that provides regional economic forecasts. In May 2006, they announced that New Hampshire would be the only state in New England to have overall economic and employment growth above the US average from 2006-2010. Overall expectations for New England were modest for the five-year period, with Massachusetts, Maine, and Rhode Island struggling.

The data about New Hampshire job growth was interesting. In 2004, the Partnership reported, the Granite State gained 37,500 jobs, an increase of 6.8% -- the highest in the nation. Some 2,400 of those jobs were in high-technology, not what you might expect from the Granite State.

A review of local venture capital firm's investment confirms the trend. Borealis Ventures, the early-stage venture capital group based in Hanover, recently announced their Fund I Portfolio Companies. Of the 12 companies in which Borealis has invested, more than half come either directly come from the Dartmouth campus or are based in New Hampshire.

It's one person's opinion, but it's also worth considering the perspective offered by Matt Rightmire T '96 of Borealis Ventures, who was recently interviewed by blogger and angel investor, Chip Griffin, about why he left Silicon Valley (where he was an early employee of Yahoo!), and joined the Borealis team in Hanover, NH. The entire interview can be found here, but it's worth noting Matt's perspective on the opportunity to be found in the Upper Valley and New Hampshire generally.

"The original impression that [my wife and I] had was that we'd probably have to sacrifice things on the career front in order to make the move, and I think, here we are, a year and a half later, and I think the sacrifice has been much smaller than either myself or Margaret imagined. Certainly, both in southern New Hampshire and more so in the upper valley and up around Mount Washington, there's a lot more going on than I think, certainly than what I expected to find. I think there are talented entrepreneurs, there are talented technologists, and more and more there's capital available here to help those entrepreneurs and technologists really explore some of the ideas that they have."

And then there are the four corporate acquisitions which took place among several established Upper Valley business in the last six months. Look for that story tomorrow.

David Weld '85 T'90 is new CEO of Seatab

Repeat entrepreneur and panelist at the 2004 Greener Ventures conference at Dartmouth, David Weld has just been hired as the new CEO of SeaTab.

SeaTab is a Seattle-based company that provides enterprise-grade business intelligence software for small to medium-sized business. Their primary product is PivotLink, which the companys says "delivers data from any enterprise system - sales, CRM, inventory, human resources, general ledger, and so on - without the need for dedicated IT resources, long implementation cycles, or extensive training."

When David spoke at Greener Ventures two years ago, he was the founder and CEO of MessageGate,
a messaging security and compliance company. The official bio goes onto to say that David was previously president and chief operating officer of Loudeye Technologies, a Seattle-based media technology and services company that acquired Alive.com, which Weld founded. He also founded Cognisoft (later acquired by Verity, Inc.) after a five-year tenure at Microsoft, where he was group program manager on Windows NT and director on the Microsoft Network (MSN).

But if you want a more interesting, unofficial bio, it's worth reading the 1997 profile of David written by uber-Silicon Valley writer Michael Lewis. Subtitled "How a WASP discovers his inner Geek," the piece ironically appears in Slate magazine, the online magazine which David led as its first manager and whose very name was his inspiration. It's a great story of entrepreneurship. The profile can be found here.

Ask Mike (Gonnerman '65)!

Back in 2002, Gregg Fairbrothers '76 and I sat around a table in the offices of the Dartmouth Entrepreneuerial Network, trying to think about an activity or event that could alert Dartmouth alumni, as well as faculty and staff, about the new initiative we were launching about entrepreneurship. Someone suggested we have a conference, but there was no consensus on how or if to proceed.

Mike Gonnerman '65 happened to visit us as we were talking about what we might do. We hadn't resolved the issue when it become time for Mike to leave. After a few minutes, he returned, put a check for $1,000 on the table, said, "just do it," and walked out of the room for good.

Five years later, we're getting ready to launch another edition of Greener Ventures, our annual conference on entrepreneurship. The conferences have been a huge hit, attracting more than 2,500 Dartmouth alumni, faculty, staff, students, and friends for a one-day conference on entrepreneurship.

If it wasn't for Mike, it might never have happened. Now Mike's published his first book and it's time to return the favor. Ask Mike is a collection of questions and answers published in his newsletter, some of which we've excerpted in the quarterly newsletter of the Dartmouth Entrepreneurial Network. You can buy the book here. It's practical, straight-forward, and just the sort of the advice that an entrepreneur needs along the journey. And if you want to see Mike in person, join us for Greener Ventures in Hanover, NH on October 21, 2006. Mike will be one of our presenters, and we're delighted he can join us. Thanks, Mike!

Dartmouth grads buy Bagel Basement

The Valley News reported on Sunday that the Bagel Basement, which they called "an Upper Valley institution" with its downtown Hanover and Lebanon, NH stores, has been sold to a five recent Dartmouth graduates who are running a venture capital consulting and investment business.

The Dartmouth alumni, all but one of whom are members of the class of 2000, operate as Seven West Ventures. The Dartmouth alumni in Seven West Ventures include Errik Anderson '00 E'06, Ned Dybvig '00, Colin Greenspon '00, Ryan Jones '00, and Dan Mahoney '01. Terms of the deal were not disclosed.

Seven West has also been involved in the re-birth of Whaleback Mountain, which is located a few miles southeast off Hanover, NH along Interstate-89. Despite a difficult season in terms of weather, Whaleback appeared to enjoy a successful year last year and plans are already underway for the coming 2006-2007 season. Seven West has been helping Whaleback become a four-season destination.

Frei '88 E'89 launches Smartsheet

We first got to know Brent in 2002 when he served as the inaugural keynote speaker for the first Greener Ventures conference, Dartmouth's now annual conference on entrepreneurship. He delivered a powerful address that year on what it took to build Onyx from an idea that he and a few Dartmouth friends had to a company in 2002 with 450 employees and $69M in annual revenue.

Brent, who is now a member of the Board of Overseers at the Thayer School of Engineering, returned to Hanover a few months ago to talk about his new startup company. And now, the rest of the world knows.

Last week, the Seattle Post Intelligencer carried a story about Frei's new startup -- Smartsheet. As Frei explained it, the inspiration for the idea came when was CEO of Onyx, and relied on Excel to track the status of projects. According to their website, Smartsheet "is an on-demand team productivity application that allows managers, teams and third parties to work together more efficiently as they set priorities, update status and track results."

Frei works fulltime these days for Nathan Myrhvold's Intellectual Ventures (check back to hear about his appearance at Dartmouth this Spring), but will remain actively involved with Smartsheet. Two Dartmouth alumni are also involved with Smartsheet: Mark Mader '92 is President of the company, and Eric Browne '90 is a co-founder and a Vice President. We wish Brent, Mark, and Eric well in their new startup!