Pharma giant snaps up Emendo
Young Christchurch health services software firm Emendo has been snapped up by a United States giant for an undisclosed amount in a growing trend for foreign purchases of small technology companies here.
The 10-year-old Emendo went to the US looking for investment capital but Fortune 500 firm McKesson Corporation wanted the whole company.
The US pharmaceutical distribution, healthcare and IT firm yesterday announced the deal to acquire the Christchurch firm, which produces software called CapPlan.
The software helps hospitals forecast and manage patient activity, helping reduce costs and improve services for patients.
Technology Investment Network managing director Greg Shanahan said the deal was part of a growing trend of foreign acquisitions of New Zealand technology companies in the last two years.
Shanahan said in the software sector it could be part of an owner's business model to build the company and sell it.
"So you tend to find a larger number of acquisitions going on in software because you get to a point where you've developed a solution and it requires a significant investment in marketing expenditure to get further penetration."
New Zealand had been an early developer of health IT and therefore companies were wanting to acquire New Zealand IP to take themselves further faster, rather than developing it in house, Shanahan said.
Emendo chief executive Dave Tinkler said the value of the deal was confidential but it was a "very positive" step for the Christchurch firm.
All Emendo's staff, including Tinkler and company founders Nick Burns and Bart Visscher, would be employed by McKesson New Zealand Ltd. Emendo has about 22 staff in Christchurch and about 30 worldwide.
Tinkler will head McKesson New Zealand.
Emendo's CapPlan is used in more than 40 hospitals in New Zealand, Australia, Canada and Britain.
The company was founded in 2002 by Burns and Visscher who along with Tinkler and director Phil Holliday have extensive holdings in the company.
Product development and sales and marketing for Australasia would remain in Christchurch, Tinkler said.
"While we'll obviously have some input from the States we will be their development arm for their capacity planning solution.
"Everyone in the company is staying on, including me and the two founders of the company, so we're all on board. This is a growth thing as far as we're concerned so everyone's going over to the new company and excited by it," Tinkler said.
He said the company was "very happy" although it had not been its original intention to sell.
"We went to the market to raise capital for growth with a view to going into the US market deeper and harder and during that capital raising we were approached by McKesson as it fitted their strategic need."
In January 2011 the company told The Press its annual revenue was about $10 million and in the next three years it hoped to reach the $50 million mark, although the latest TIN100 report estimates Emendo's annual revenue as about $4.9 million.
Tinkler yesterday said he could not comment on the company's current revenue.
McKesson, ranked 14th on the latest Fortune 500 list, called CapPlan "a natural extension" of its own McKesson Technology Solutions software.
The Fortune 500 lists the top US companies ranked by revenue by Fortune Magazine.
New Zealand technology companies bought by overseas companies:
EMS Cortex (part of Enprise Holdings) acquired by Citrix in the United States
Mcom acquired by Fiserv (US)
Aptimise acquired by Riverbed Technology (US)
Prism Software acquired by EFI (US)
Right Hemisphere acquired by SAP (Germany)
Commtest Instruments acquired by GE (US)
Datasquirt acquired by LiveOps (US)
Escort Data Logging Systems acquired by TCP Reliable Corporation (US)
Flo-Dry Engineering acquired by Haarslev Industries (Denmark)
Sonar6 acquired by Cornerstone OnDemand (US)
Energy Intellect acquired by EDMI (Singapore)
Zeacom acquired by Enghouse (Canada)
4RF acquired by Fortissimo (Israel)