Deals that transformed Philly’s tech scene in 2021

The relentless rise in U.S. tech stock prices since the last recession, and the private-company valuations that follow those stock trends, this year fueled a rush of deals by Big Tech and private-equity giants, reshaping the landscape of Philly’s technology employers alongside everyone else.

Just last week, Oracle, the Silicon Valley business-software giant, which has folded a string of Philly-area software start-ups into its Conshohocken office, agreed to spend $28 billion for health-information technology maker Cerner Corp., based in Kansas City, whose local base includes the former Shared Medical Systems offices along U.S. 202.

Oracle, whose logo can be seen by passing Schuylkill Expressway passengers, “already has close to 1,000 locally based employees,” mostly sales- and service-focused. “And the Cerner deal will take them over that,” notes Dean Miller, who runs the Philadelphia Alliance for Capital & Technologies. He’d love to see Oracle engage more with “the Philadelphia tech scene,” its trade groups and networks.

That would be a welcomed escalation: So far, Oracle’s Philly presence and participation have been modest compared to global rival SAP, the German business-software giant whose U.S. headquarters is in Newtown Square, Miller said.

Overall, it has been a “torrid sellers’ market” for private businesses in general, and software companies in particular, according to GF Data Resources, a Conshohocken firm that tracks private-company sales.

The typical sale for companies worth less than $250 million was priced at 7.6 times earnings — the highest since the firm began tracking in 2005.

Miller provided this list of earlier deals that have transformed Philly tech companies in 2021:

1) In May, private-equity software investor Francisco Partners and partner TPG agreed to buy Boomi, the Chesterbrook-based developer of cloud-connected corporate software that helped many companies move workers to secure remote networks well before the pandemic. Dell Technologies sold Boomi for $4 billion.

Boomi had grown from 30 employees to more than 1,300 in the decade since Dell bought the company as a start-up. That was before founder Michael Dell decided it was time to cut back on the number and breadth of business units the company had accumulated on his watch.

CEO Chris McNabb, who plans to retire, says that Francisco and TPG are the grow-faster type of private-equity owners, not the strip-em-down-and-sell-’em kind — and that Boomi plans to accelerate hiring on TPG’s watch.

2) In February, Dutch tech giant Royal Philips NV paid $2.4 billion cash (plus $400 million for cash, and debt assumption) for BioTelemetry Inc. the nearly 2,000-employee maker of Holter heart monitors, with offices in Malvern and plants in Linwood, Delaware County, and Minnesota.

The company was called CardioNet when it was based in Conshohocken, until 2013. As BioTelemetry, it grew sales to more than $400 million through a string of acquisitions under CEO Joseph H. Capper, a former Bayer executive.

3) Ametek Inc., the Berwyn-based instruments and electronics maker with more than 200 factories around the world, made a string of acquisitions, including Abaco Systems Inc., a Huntsville, Ala.-based maker of battle-hardened computer systems, for nearly $1.4 billion.

4) Sidecar, Andre Golsorkhi’s 175-worker, Center City-based firm that helps advertisers push their products on Facebook and Google, agreed to be acquired by Quartile, a New York firm that focuses on Amazon’s fast-growing ad business.

The company will take Quartile’s name and will be run from New York by boss Daniel Knijnik, but Golsorkhi says he and his staff will be a key part of its growth. The buyer won’t say what it paid, but shareholders such as Nate Lentz of Osage Venture Partners and Paul Melchiorre of Stripes say their fellow early investors were well-rewarded.

Other SideCar funders include Ben Franklin Technology Partners’ GO Philly Fund, Robin Hood Ventures, Mid Atlantic Angel Group, Pennsylvania banking secretary Richard Vague’s Gabriel Investments LLC, iPipeline founder Tim Wallace, Fanatics owner Michael Rubin, and LiquidHub founder Jon Brassington. Most are betting on further growth, taking Quartile stock and hoping for a bigger payday ahead.

5) Bentley Systems, the family-founded Exton construction-software maker that went public last year, agreed to acquire Power Line Systems, a Madison, Wis.-based electricity-transmission design software firm, from private-equity owner TA Associates, for about $700 million.

Bentley went public at about $33 in September 2020 and topped $70 in September, before slipping to about $50 in recent trading. At a market value of $14 billion, the price still implies very rapid growth expectations, given the company’s yearly sales, which could top $1 billion for the first time next year.

6) Vertex Inc., the King of Prussia state and foreign tax software company that also went public last year, has also been piling on acquisitions, adding Ireland-based digital tax and transaction software maker Taxamo, SAP-oriented tax software maker LCR-Dixon Corp. and “edge computing” specialist Tellutax over the course of the year. Shares have lately traded below last year’s IPO price.

7) CoreDial, a 16-year-old Blue Bell cloud-communications and contact center developer that sells what it calls UCaaS (that’s “Unified Communications as a Service”) to 32,000 business clients, has agreed to be acquired by New York-based BCM One, which will combine CoreDial with its own SkySwitch platform, creating what the buyer says is the industry’s largest player.

“Our team [will] join the BCM One family, said CoreDial boss Alan Rihm in a statement.

On Dec. 21, the Pennsylvania Department of Labor announced 62 CoreDial employees would be permanently laid off.

BCM One is beefing up its national reach. It has acquired at least five firms since St. Louis-based Thompson Street Capital Partners began financing its deals in 2019.

8) Clinical Ink, a Horsham-based developer of remote clinical trials headed since 2012 by onetime Eli Lilly investment strategist and serial health-tech adviser Ed Seguine, has agreed to buy clinical- trial design firm Digital Artefacts, of Iowa City. Its focus includes data scanning and collection for brain treatments. Clinical Ink’s expansion follows a big investment by GI Partners of San Francisco last year.

9) PCI Pharma Services, a Northeast Philadelphia-based contract drug manufacturer (CDMO) has 4,000 global employees who have worked for a string of operating and investment owners, currently Kohlberg & Co. LLC and Abu Dhabi’s national investment fund Mubadala Investment Co.. PCI agreed to buy LSNE Contract Manufacturing, a Bedford, N.H.-based drugmaker, from British private-equity investor Permira.

10) Anexinet, a Blue Bell-based software integrator lately focused on cloud services, used capital from New York-based owner Mill Point Capital for its acquisition of Atlanta-based Light Networks LLC, furthering Mill Point’s goal of taking the business national.

11) Thoma Bravo is the Chicago software investor that previously purchased born-in-Philly software makers Qlik (business-sales), iPipeline (insurance) and Elemica (supply chain). Last May Thoma Bravo agreed to buy Greenphire, a fast-growing, King of Prussia-based provider of clinical-trial financial software, from private-equity owner Riverside Co. Greenphire employs more than 250 and has been hiring aggressively.

12) SEI Corp., the Oaks, Montgomery County-based investment and financial-tech company, acquired Finomial, an investor-servicing automation company with offices in Boston and Calcutta. Like Vanguard Group, SEI is cutting costs by helping clients digitize financial advice where possible.

13) Also, last week, OrthogenRX Inc., the Bucks County developer of knee osteoarthritis treatments, agreed to sell to Avanos Medical Inc., Alpharetta, Ga., for $130 million up front, plus up to $20 million more if its FDA-approved treatments sell as projected.

OrthogenRx plans to keep hiring as part of Avanos, with a new product, Signal NPV, due late next year, CEO and scientific founder Michael Daley said. Sales totaled $70 million this year. His backers include pharma-business veteran Dave Owens and more than 60 other individuals, who together raised more than $3 million, plus backing from Ben Franklin Technology Partners and Bucks County’s Venture Capital for Bucks County (VC4BC), financed by the county pension plan.