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3000 vendor's buyback leverages new efforts

Speedware launches revival with buyback

A 34-year-old firm has returned to its 3000-savvy owners, including a share set aside for employees to invest in for careers serving customers in the community.

One of the top resources for 3000 migrations has taken hold of its own investment decisions again, as Speedware bought itself back from corporate owner Activant Corp. The purchase for $12.9 million opens the doors for new efforts in Speedware’s migration operations, ones which the company recently extended to the IBM market as well as adding a new tool that enables migrating PowerHouse customers to Java.

“For people who care about the HP 3000 and migrations, this is a great story,” said president Andy Kulakowski, whose roots with the system go back to programming on a Series III in the 1980s. The company sold itself to Activant in 2005 for $120 million, a deal that swung on the value of Speedware’s then-recent acquisitions of application customers in markets from automotive to building materials. Speedware's sold its entire group of operations -- including those units they'd acquired in places like automotive aftermarket applications -- to Activant.

Speedware has bought back its core 3000 business, along with the OpenERP application company which was once eXegeSys, and before that, MM II. OpenERP offers manufacturing suites on a wide range of environments.

Kulakowski said that soon after the company became part of Activant in 2005, “we felt somewhat orphaned,” being owned by a corporation that didn’t understand Speedware’s core migration and modernization business.

It was clear early on that they were not going to invest in the core business,” Kulakowski said. “It was not strategic to them and never would be.” Speedware’s managers continued to approach Activant about buying back the company, but the profitable business returns kept the firm in Activant’s $200 million portfolio.

While Speedware built the largest list of migration clients, Activant wouldn’t let the company buy Ordina, a software firm that sells an MPE-on-HP-UX emulation  solution, MPUX. Speedware had acquired AMXW, another migration hosting suite, before the Activant deal closed.

The repurchase of the company that closed in late June was spurred by investment from Fondaction, a Canadian government fund built to keep Canadian companies owned by Canadians. Kulakowski said the buyback puts 82 percent of the ownership equally in the hands of Fondaction and the 7-member management team of Speedware, a group whose members’ tenure averages 20 years with the company.

The balance of the company is owned by the rest of the Speedware employees. “We wanted it to be our legacy, pardon the pun, to get ownership opportunities for the employees themselves,” Kulakowski said. He added that the funding from the employee owners isn’t crucial to making the buyback work, but inviting the staff into ownership shares felt like the right thing to spur initiative.

Kulakowski said the Quebec investment fund differs from the classic venture capital group. “They’re not only interested in a return on their investment. They’re equally interested in stimulating the economy here in Quebec.”