Quotable: “You’re right, Peter. No one’s wired quite like you!” – TogetherSoft board member to Peter Coad.

RESEARCH TRIANGLE PARK — Talk about an exit strategy. TogetherSoft found what many people consider to be a whopper this week when it was sold outright to public software company Borland for $185 million — including more than $80 million in cash.

“That is quite a deal,” the chief executive officer of another RTP software firm said somewhat incredulously. “That’s almost four times annual revenues.

“Most software firms, even if they can find a buyer are going at 1 ½ to 2 times revenue at most.”

Another former software exec was surprised to hear who the buyer was.

“Who bought TogetherSoft,” he asked as we walked the floor at InfoTech 2002. “Borland? What’s their stock at now.”

Informed that Borland’s market value had increased by a third in recent days, he shook his head in dismay.

“I owned that stock for a long time — and it did nothing,” he said.

That trend seems to be over. The market apparently likes the TogetherSoft deal, sending Borland stock up $2, to $13.35 as of 10:30 Friday morning, in two days.

And Borland, which has been on a buying spree, may not be over. Word is the company is looking at acquiring another software firm in RTP.

Saying no to IPO

Whether another deal happens or not, TogetherSoft founder and chairman Peter Coad is extremely pleased — and probably a lot wealthier — as a result of the deal. TogetherSoft did take in outside investors and raised $20 million in venture capital, so he’s given up a good share of ownership. But $185 million can go a long way in pleasing those who owned TogetherSoft stock at whatever level.

“As one venture capitalist said, IPOs are few and far between,” Coad said in a phone interview with Local Tech Wire. “Why sell? We certainly have had discussions about this over the past year.”

But Coad said he wouldn’t have sold out unless he felt that “our core values match”. He talked at length about the philosophies of each company, and how “our cultures matched”. He mentioned more than once that he felt “the focus, the developers, the cultures all matched.”

Those remarks shouldn’t be taken for granted. Coad, a widely published author, considers himself foremost a “strategist”, not a technologist or executive. He said he intends to stay with Borland and will focus on strategic thinking for the combined firms. Coad also said he wanted TogetherSoft employees to be able to work in an environment at the company he founded it in 1997.

That’s not to say the company hasn’t had challenges along the way. Three top executives left TogetherSoft shortly after Coad stepped aside earlier this year to become chief strategist. He insisted again on Wednesday that “it was my idea” and that he told the board of directors “it was time to get someone else to run the company day to day. — Let me do what I do well.”

He jokingly said he wasn’t “wired” to be a CEO and added a board members said, “You’re right, Peter. No one’s wired quite like you!”

Coad remained as chairman and said he had the clout to bring in John “Beau” Vrolyk as an interim CEO. He considered Vrolyk a “mentor”.

Potholes on road to sale

But the company also went through some layoffs this year as well even as revenues were growing at a 20 percent rate for the most recent quarter. TogetherSoft projects $50 million revenue this year. Many signs seemed to be pointed toward an IPO despite a tough market. And just a few weeks back Vrolik stepped aside when Jeffrey Lunsford, a former fighter pilot who helped take an Atlanta firm public, was brought in.

Any thoughts of an IPO went away, though, as talks between Coad and Borland execs, which began late last year, heated up. They talked about how the former rivals could work together. One thing led to another until a decision was made to combine the two firms, Coad said. Borland sees TogetherSoft’s emphasis on developer tool suites as a compliment to its business of software application development, services and consulting.

“I love the combination,” said Coad, who drew on his past athletic career as a swimmer to draw an analogy. “I am really energized — I feel like I’m in the starting blocks. I can hardly wait.”

The core TogetherSoft team will stay in place in Raleigh as the TogetherSoft Business Unit. But Coad will not be around Raleigh much. He and his family recently moved to just outside Houston, TX, for family reasons, he said.

“It’s warm there,” he added with a chuckle. “I like warm.”

But Coad isn’t leaving the Triangle without some regrets. He said he would miss living in the Triangle and that he was grateful for the support he had received and the people he had met and hired for the company.

“For the local area, this is a big win — a big win for an area I love,” Coad said. “I gotta tell you, this is the beginning of a success story that’s continuing to build.”

Rick Smith is managing editor of Local Tech Wire.