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News Room: Member & Sponsor Spotlight |
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How A Successful Acquisition Helps The Silicon Forest Grow
Thursday, June 03, 2010
SAO spotlight: Sabrix Tax Services / Thomson Reuters
Founded in Oregon in 2000 by Tektronix executives, Sabrix has been a great example of the "second growth” of the Silicon Forest. While the company opened an office for senior executives in the Bay Area in 2002, its largest facility and employee base have remained in the Lake Oswego area, providing as many as 180 local jobs. Late last year, the company was acquired by Thomson Reuters, becoming part of its Tax and Accounting business.
Some may decry an Oregon company being bought by an out-of-state corporation. That’s not how Gary Allen sees it. This Sabrix co-founder and now VP of customer advocacy points out that "to get the Oregon tech community moving, we needed more gas in the engine here. Co-locating with venture firms and experts in California served to provide the capital and expertise to grow our business here. This is an Oregon venture success story that other local software firms can learn from.”
Investment money was the fuel that primed the young company. "Sabrix made the decision from the get-go to get a tier-one source of capital,” says Allen. He explains that a company in Sabrix’s position with significant capital investment then has three possible outcomes:
- Acquisition and growth. The acquiring company sees strategic and future revenue opportunities, and wants to invest and realize those goals. Good for Oregon
- An IPO. While also good for Oregon, the market has not been good for technology IPOs for some time but it is improving now.
- An acquisition because the company is no longer viable. In this case, the acquiring company is likely to cherry-pick assets and not commit to the local workforce. Bad for Oregon.
"We’re clearly in the first category,” says Allen. Sabrix and Thomson Reuters have collaborated since 2003. He sees the acquisition as a logical outgrowth of that partnership and the synergies that developed over the years. Just as important, Allen says, "We will continue to operate out of Oregon, which houses our product management, engineering, support, and tax services, and a mix of professional services and marketing professionals as well.”
That’s why Allen sees three reasons why the acquisition can be seen as a boon for Oregon and the SAO.
- Increased stability and growth opportunities. Thomson Reuters has a long history in acquisitions and the vast majority of its new companies are stronger after acquisition than before. The Tax and Accounting division itself has a track record of 97 percent employee retention over the first year after acquisition. "Thomson Reuters has been a partner for a long time,” says Allen, "and frankly they have a much bigger sales force. Increased sales can lead to more employment opportunities in the division, here in Oregon.”
- More visibility that can drive investment. Sabrix fulfills the global transaction tax management capability in the Thomson Reuters portfolio, strengthening the existing footprint of tax and accounting software and services. "We now have increased visibility within the larger company and look forward to significantly contributing to the overall bottom line.”
- A bigger, worldwide company in the SAO. Since Sabrix employees are active in the SAO, stability and investment for Sabrix only serves to make the SAO more solid. In addition, the SAO gains the much larger member, with a recognized global brand, and contributions from one of the world's leading sources of information for businesses and professionals.
So what can other SAO member companies learn from the Sabrix success story? Allen offers three recommendations:
- Know what kind of outcome you want. If you focus on profitability and efficiency, then you will be appropriately staged for either an IPO or a successful acquisition.
- Choose your business partners carefully. Acquisitions often come from larger, more established business partners. Look at their track record in acquiring companies. "Thomson Reuters’ history with us as a partner made them my first choice in terms of an acquisition,” Allen says.
- Fill a critical part of the partner’s service offering. The more important you are to the partner’s most profitable business, the better your chances for a favorable acquisition.
Any successful merger or acquisition can serve to grow faith in the strength of the Oregon technology community and its work ethic. Allen points out that strong, local companies can help build stronger support among the venture community as well. "Making more successful ventures here is the best way to keep the Silicon Forest growing.”
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