California investors acquire RedPrairie Corp.
Laptop Battery By Joe Vanden Plas • 05/15/06 Waukesha, Wis. - RedPrairie Corp., the Waukesha-based manufacturer of supply chain software, has been acquired by the California-based investment firm Francisco Partners.
While terms of the deal were not disclosed, representatives from both companies confirmed that RedPrairie leaders have signed a definitive agreement to turn ownership of the 30-year-old company over to Francisco's general partners. The deal is expected to close in the next 30 to 60 days.
There is something compelling for both parties in the deal. RedPrairie spokesperson J.J. Berrall said it will be an opportunity for RedPrairie to expand its suite of operations, which center on supply technology such as Radio Frequency Identification (RFID) and carrier portals for transportation and warehouse management.
By drawing on Francisco Partners' $2.5 billion in investment funds, the Wisconsin company can branch out through acquisition and growth. "There are only a couple ways to grow, and this offers us a way to grow in a way we are interested in," Berrall said. "Customers need lots of different tools, and we'll keep growing in that way."
Ezra Perlman, a principal with Francisco Partners, said his firm had not made any prior business deals with RedPrairie, and said its decision is based on the strength of RedPrairie's management team. "This [acquisition] is a validation of that [RedPrairie] team and their ability to grow a company," Perlman said of the deal.
RedPrairie's team of leaders has been involved in the founding of several companies, including Nuclio Corp., Intrepa, LLC, and Software Architects, Inc. In 2005, RedPrairie acquired three firms, RangeGate, ALTA, and MARC Global Holdings, Inc., that have expanded its solution capabilities and global footprint.
RedPrairie, which employs 738 employees across more than 20 global sites, expects to generate $172 million in revenue in 2006, and EBITDA (earnings before interest, taxes, depreciation, and amortization) of $39 million. The company has several technology products, including Service Oriented Architecture (SOA) that has been implemented at hundreds of sites, an on-demand user interface, and a new suite of supply-chain management solutions enabled by the SOA.
Executives were quick to note that although RedPrairie is changing hands, the company plans to continue operating the same way it always has. Perlman, who characterized the agreement as a "business-as-usual type of deal," said that Francisco Partners has no need to alter RedPrairie's process. "RedPrairie's previous owners were not involved in the day-to-day [operations], and that's how we are as well," Perlman said. "We acquire companies and over time, as these companies develop, we get bigger and better companies and look to sell them down the road, and make a return on our dollars."
The unveiling
In other news, RedPrairie introduced a suite of supply-chain solutions during RedShift: 2006, the ninth annual user conference and logistics industry summit. RedPrairie unveiled its E2e suite of solutions, which is described as an end-to-end product that addresses the consumer-driven supply chain challenges faced by customers.
RedPrairie executive John Jazwiec said companies have identified a need for supply-chain solutions that go beyond optimizing processes within the warehouse. The entire integrated suite of E2e solutions use consistently thin client screens and is built upon the Service Oriented Architecture that RedPrairie has developed over the past 10 years.
"Every industry is being challenged with increasingly complex multi-channel demands, especially from the end consumer, of their products," Jazwiec said.
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