Discussing Acquisitions with ETI-NET

Posted by Gabrielle Guerrera on Tue, Apr 19, 2016

ETI-NET-logo-medium.jpgWe recently had the opportunity to chat with ETI-NET President Andrew Hall, Chief of Staff Said Hini, and Investor Dan Charron to discuss the company’s acquisition of UK-based Insider Technologies and ETI’s growth strategy in the NonStop space. We knew it would be an interesting conversation, as ETI-NET itself was recently acquired and then the company in turn purchased Insider Technologies, both within the last year.

Historically, ETI-NET is among the oldest partners in the NonStop space. The company was founded in the mid-80s, and they partnered with Tandem by 1987 on early projects. While they have always specialized in NonStop, in the early 90s the company branched into a secondary business, in partnership with Tandem, going after state- and country-level lotteries in Canada (where the company was originally based). That part of the business was sold in 2000 to a group of investors, but the core business of working in the NonStop space and working with intersystem products has been the core of the business for over 30 years.

This long history in the NonStop space is what positioned ETI-NET to be attractive to investors.

"Probably the most interesting or the trigger event that led to the sale of the company surrounds the selection by HPE to use our BackBox product (a virtual tape system) as their second-generation offering to the customers," said Andrew. "By 2012, we had been so successful with the system that we had engineered to compete against HPE, that when it came time for them to refresh their virtual tape system (VTS), we were selected to be the product of choice. That put us in conversations with HPE to get the contracts built, and the lawyers who were representing us were in fact the conduit by which the buyer became aware of us."

That investor was Dan Charron and the venture capital firm that he belongs to. While the firm's investment background is primarily in real estate, IT and pharmaceuticals, they became interested in investing in software companies. Due to the caliber of the customers working with NonStop and ETI-NET's strong positioning in the space, ETI was an attractive option.

"We are a private equity firm that's looking to invest in software companies, and we believe in the future of NonStop," said Dan. "We acquired ETI in January 2015 and then made the acquisition of Insider Technologies in October 2015. So we acquired two companies that are heavily involved in the NonStop space, and we are looking to make additional acquisitions as well. We're working to create an enterprise that is better organized, with synergies between companies. All of this is part of broader strategy to build a company within the NonStop space and beyond that is able to leverage the strengths of all of the subsidiaries and create better products for the customer in the process."

So why move so quickly in acquiring two companies? That just comes down to the nature of technology and the nature of NonStop. While technology changes often, the NonStop space has a history of being extremely stable and attracts not only long-term, high-profile customers, but also employees that stick around for their entire careers. As ETI-NET was looking to grow and expand into other areas of the space, Insider Technologies jumped out at them.

"Insider is a very solid company with great software, a stable and diverse customer profile, and great development personnel," said Dan. "Also, when we looked into the company, we thought that there was a lot of intellectual property (IP) that they had that would greatly reduce our time to go to market on the new products that ETI was developing. Their UK team has a lot of brain power and talent. ETI has been working for a while now on new products, so the acquisition of Insider has brought in a lot of IP that has helped us speed up the launch of these products and improve them as well. It has also opened up lines of communication between developers and staff, and their positioning in Europe as been beneficial and opened up new markets."

"We are taking the best of both worlds and merging them together: the strength, talents, and brainpower of the people in both organizations and the IP in both organizations has been brought together in one healthy tree, which means that the “roots” of the parent company must be strong and well planted. We're able to leverage some of the strengths that complement our organization and vice versa."

You can read our entire interview with Andrew, Dan and Said in the March/April 2016 edition of The Connection.

Topics: HPE NonStop, ETI-NET, Insider Technologies, Acquisitions, NonStop