Software company sells out to US investor

By NZPA

Thursday 12th December 2002

Auckland-based email security firm Marshal Software is being sold for US$23 million ($45.8 million) to Nasdaq-listed American firm NetIQ.

The cash deal closes on December 31.

Marshal Software general manager John Skeates told the New Zealand Herald that local and foreign venture capital firms had missed their opportunity to get involved when Marshal went to the market two years ago.

"It wasn't met with a flood of interest."

Mr Skeates said that over the past six months Marshal had been approached weekly by firms wanting to discuss a variety of agreements from capital to purchase.

He said the sale was necessary to give Marshal's software products MailMarshal and WebMarshal a crack at becoming market leaders.

"We believed Marshal could be a major player as the content security market matured and we wanted to be one of the players left standing.

"We want to be a global brand and around in the long term."

NetIQ said the acquisition would allow it to help email administrators to control spam (Internet junk mail) and monitor electronic data entering and leaving a system.

The sale raises the question of whether selling out to US firms is the inevitable result of success in New Zealand.

Eighteen months ago, Prime Minister Helen Clark said Marshal was the type of company the Government wanted to encourage.

Marshal was one of the fastest growing firms in New Zealand with 870 percent growth in two years. It also reached the top 20 in the Deloitte Asia/Pacific Fast 500 with a final result due soon.

In November Marshal reported an annual turnover of more than $12 million.

Marshal's major shareholders/directors and beneficiaries of the deal are founders Sean Dick, Martin Oxley, Kevin McFall, Peter Hodges and Alan Wilkinson.

Mr Skeates joined two years ago and is also a director with a smaller stake, and there are other minor shareholdings.

Mr Dick will leave the post of managing director to focus on Marshal's former parent firm, Designer Technology.

Mr Wilkinson, who was on the board and not involved in day to day operations, is also leaving.

Mr Skeates remains general manager, reporting to US senior vice-president of NetIQ Tom Kemp, who was in New Zealand yesterday.

Mr Kemp said Marshal was in a hot niche in the software market. Research showed 40 percent of email received by corporates was spam, and the companies needed software to control it.

"It is a huge point of pain for IT staff and personnel."

Mr Skeates said NetIQ had a commitment to a New Zealand facility and its 57 staff would be retained.

Mr Skeates said the deal would help both Marshal and New Zealand attract more top developers.

NetIQ expected the firm to contribute $US2 million a quarter to its quarterly turnover of $US77 million.

Mr Skeates said the route taken by Marshal was pioneered by Symantec's $US27.5 million purchase of Auckland-based Binary Research's Ghost software and development team in 1998.

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