Masstech and Software Generation Ltd. (SGL) earlier this week announced the merger of their companies into a new business called Masstech Innovations Inc.
The deal leaves FPE Capital, a U.K.-based equity investment company, as the majority shareholder and Masstech President and CEO Joe French with an increased ownership position in the combined business.
French is moving to the U.K. to manage the combined company from what previously was SGL’s headquarters. SGL founders together, the companies’ Bernie Walsh, Dave Bray and Paul Moran will stay on as consultants during the transition, after which they will retire.
I spoke yesterday with Savva Mueller, Masstech VP of product management and marketing, about the merger, what it means for the companies and customers and how the combined operation will proceed.
When did Masstech and SGL first start looking at a merger?
For all of 2017, the deal has been in the works.
A lot of due diligence has been done. During that time, we ensured that we felt really good with the outcome of the transaction and that we knew that this combined organization was going to be a business that was going to succeed.
While doing that due diligence, what did you see that pointed to your confidence in the success of the merged companies as a combined business?
In doing the due diligence, we found both companies shared a common set of values and expertise and that as far as the technology both companies had strong technology and customers who were very happy with the products and support they had received.
We felt it was absolutely important to have that common set of values and expectations.
We also found there were synergies both companies could explore in terms of the way each looked at archive management, storage management and workflow.
We think as things progress we can take advantage of these differences.
Both companies also have started to move towards adding cloud capabilities and managed services capabilities.
We are really excited about that potential moving forward –to take the work both companies have done and begin to take advantage of the public cloud and the private cloud.
Did you uncover other synergies?
We have some complementary strengths. From SGL’s perspective, the company has been very strong in production archive, and from Masstech’s perspective we have been very strong in transmission archive and news archive.
We weren’t really in competition in all that many situations in the past.
What impact will this merger have on the workforce of both companies?
We have complementary sales forces.
We are keeping the entire sales force, the entire engineering team and the entire support staff because we felt that it allowed us to get to the critical mass we needed to get to as a company.
Really, other than the three founders [of SGL] retiring, there is no other attrition that we are expecting as part of this new organization.
This isn’t a situation where we are looking to make any of the solutions into cash cows. We want to build our organization, build our solution set and continue to expand the areas where we are providing those solutions.
What about R&D synergies?
We are continuing with both brands, and we are continuing with the development of both. We eventually will incorporate the best of both, but those decisions are still to be made.
Tell me a little more about the new ownership.
FPE Capital is the company. It is a London-based private equity group.
They invest in companies they really want to build and grow. They have some experience with companies in our market because they are the majority shareholder in Sohonet.
So, they have experience in media technology through Sohonet. The transaction itself was also consulted on by Media Asset Capital.
Will the new organization be run from the U.S. or the U.K.?
Joe French, who is the Masstech CEO, is going to be the CEO of the expanded organization. He is going to move over to the U.K. to manage it from SGL’s existing office.
We feel that is taking the best of the both worlds, keeping the U.K. base SGL had established and making that a strong base of operations for the reformed company and keeping Joe there to provide strong leadership for the three founders who are retiring.
How will the merger impact the relationships both companies have established with third-party companies?
We are very committed to maintaining and enhancing the third-party relationships that enable asset management and archive management to enable our customers to take advantage of all of their assets.
You know being able to archive everything doesn’t do you any good unless you have the ability to find and reuse those assets quickly and easily.
Having the third-party integrations and relationships is really key to making that happen.
We recognize people have to work in a lot of different applications and we want to make sure that we are always seamlessly tied into them so they can get the content they need where they need it.
More information about the merger is available on the Masstech website.