For the second time in about three years, a San Francisco-based tech industry giant has reached a deal to acquire an Indianapolis-based, publicly traded tech company for a 10-figure sum.
In the immediate wake of news Wednesday that Interactive Intelligence Group Inc. had agreed to be acquired for $1.4 billion, Indianapolis tech leaders bubbled with praise for CEO Don Brown and with enthusiasm for the possible impact on the city.
"This is a big transaction that puts Indy’s tech community even more on the map and reinforces that substantive, successful tech companies grow here," said Mike Langellier, CEO of TechPoint. "The transaction also puts money in employees’ pockets that will hopefully be reinvested into local companies."
Industry veterans saw that scenario play out three years ago when customer-relationship-management firm Salesforce.com Inc. bought Indianapolis-based ExactTarget Inc. for $2.5 billion. Its executives and major investors have reinvested significant sums in new companies and efforts to grow the area's tech roster.
Brown, 60, is Interactive's largest shareholder, with a 17 percent stake. He is set to receive $236 million for his 3.9 million shares in the buyout. Also scoring a big payout will be Interactive board member and longtime tech-company investor Mark Hill, 59, who is in line to receive $10.3 million for his more than 170,000 shares.
Both Interactive and acquirer Genesys Telecommunications Laboratories Inc. make call-center software. Privately held Genesys, which is based near San Francisco, said it plans to continue offering products from both companies with “significant R&D investment across the full product portfolio.”
Wednesday's announcement from Genesys was hailed by industry observers as evidence that entrepreneurs can build desirable technology companies in the Indianapolis area.
Here's a sampling of reactions:
Bob Compton, a pioneering Indiana venture capitalist from the late 1980s to early 2000s: "I think it means that Indiana can grow large, valuable software companies. And there's so much talent in Indiana that it would not surprise me if the acquiring company continues to invest and add employees."
Bradley Wheeler, vice president of IT at Indiana University: "Don [Brown] and his team have led a remarkable renaissance of the [Interactive Intelligence] set of products into cloudscale-era services. I’m not at all surprised to see the market again grab another tech jewel in Hoosier state."
Kristen Cooper, Founder of Startup Ladies: "If this acquisition is anything like Salesforce, we'll see some executives exit with some very generous packages. This could be the next wave of angel investors in Indiana. When they're ready, The Startup Ladies will be happy to introduce those folks to women building scalable companies who are ready for funding."
- Michael Huber, IndyChamber CEO: "It’s always difficult to speculate what a deal like this will mean for the local economy. But it’s worth noting that our Chamber offices are in the Salesforce Tower, recently renamed for another California-based company that has decided to invest in Indianapolis in an acquisition that’s led to hundreds of new, high-paying, high-tech jobs."
High Alpha Studios LLC would be an example of the impact a big tech exit can have on a community. Led by former ExactTarget CEO Scott Dorsey, High Alpha is devoted to building and funding software companies. Founded in 2015 and staffed in part by a gaggle of other ExactTarget alumni, the company already has created three companies and taken another under its wing.
With his latest deal, Brown has founded and sold three technology companies in his lifetime, including Software Artistry to IBM in 1994.
Steve Fouty, an ExactTarget and Software Artistry alumnus, said he remembers the day Brown left Software Artistry to start Interactive Intelligence in 1994. He said Brown has a knack for building successful outfits from scratch.
"It wasn't like ExactTarget was. They were kind of low-key in the community and didn't get a lot of press," Fouty said of Interactive Intelligence. "But Don is just a master at growing companies, and what's important to him are his employees."
Compton met Brown in 1989, invested in Software Artistry and was an early board member at Interactive Intelligence.
"[Brown] is one of the most talented, high technology entrepreneurs that I have ever worked with," Compton said. "He's brilliant, enormously creative and remarkably humble."
Brown told IBJ he plans to leave the firm when the deal closes at the end of the year and possibly pursue ventures in the healthcare and biotechnology space.
Interactive Intelligence employs about 1,000 people in Indianapolis. Genesys said the city will be its single largest location. It has about 2,800 employees across 80 countries.
Genesys CEO Paul Segre was in town on Wednesday, speaking with Brown to Interactive employees.