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American City Business Journals
(news from 41 Business publications around the country)
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Daticon purchased for $30M
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03/06/2006 08:08 AM
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| By Efrain Viscarolasaga |
The acquisition of Daticon Inc. by Minnesota-based Xiotech Corp.
closed last week, with Xiotech laying down $30 million for virtually
all the assets of the Norwich Conn.-based maker of e-discovery and
litigation software.
The deal, which was dependent on Daticon’s
completion of its bankruptcy filings, will result in Daticon operating
as a business unit of Xiotech, while maintaining its staff and
facilities in eastern Connecticut.
Bill Zambarano, president of
Daticon for the past two-and-a-half years will remain as a Xiotech vice
president and general manager of the Daticon unit.
Daticon used the
bankruptcy process to pull itself back from the brink of disaster and
position itself for the sale. It also enabled the company to reposition
itself in a growing e-discovery market, according to Zambarano.
“As
part of the sale process, we elicited several bids, and some did not
require bankruptcy, but contained warrants and other conditions we
weren’t prepared to do,” he said. “I think we did the honorable thing.”
While
not a common maneuver in the grand scheme of mergers and acquisitions,
filing for bankruptcy as a condition of an acquisition happens on
occasion for companies in difficult financial situations, said David
Hoffer, an investment banker at Burlington’s Mirus Capital Advisors,
which handled the deal.
For Daticon, that predicament stemmed
from debt acquired through a leveraged buyout executed in 2003, as well
as an inflated long-term lease for the company’s current facilities,
according to Hoffer. But the company had multiple offers, according to
both Hoffer and Zambarano.
“There was a sound business
underneath,” said Hoffer. “There were a bunch of companies that wanted
to get into the growing e-discovery space and saw Daticon as a way to
get their foot in the door.”
Zambarano reports there will be no
layoffs as a result of the acquisition and, in fact, the company has
hired about 20 people over the past four weeks.
The company is
also planning to move from its current facilities, though Zambarano
insisted Daticon will remain in Eastern Connecticut.
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