SirsiDynix has acquired EOS International from its cofounder and Chief Executive Officer Scot Cheatham effective November 1, 2013. The transaction was conducted entirely from financial resources within SirsiDynix without additional backing from its private equity owner, Vista Equity Partners. The acquisition of EOS International will expand the presence of SirsiDynix in the small library arena, and will strengthen its overall position in terms of revenue, customers served, and product offer ings. SirsiDynix provides a stable and expansive business environment for the ongoing support, development and marketing of EOS International products.
EOS International will continue to operate as a separate, wholly owned subsidiary, though under the management of SirsiDynix. Scot Cheatham has exited the company and Sirsi- Dynix CEO Bill Davison will now also serve as CEO of EOS International. Cheatham will continue to be available during a transition period. EOS executives continuing in their roles include Vice President of Product Development Jeff Goodwin, VP of Client Services Jeff Smith, Greg Leiser, VP of Finance, and VP of Global Sales and Marketing Sal Provenza.
SirsiDynix and EOS International both emphasize that this acquisition will not have an impact on the products of either company. The suite of EOS.Web products will continue to be supported and developed according to the short and long term roadmaps previously established. The automation products of SirsiDynix and EOS International are designed for quite different types of libraries, making product consolidation unwarranted.
In a statement to EOS customers, Scot Cheatham states: “Collaboration between SirsiDynix and EOS will allow us to apply significant resources to enhance our flagship product, EOS.Web. It will broaden our sales and marketing capabilities, and will help us to continue to strengthen our client services offering.” Although EOS International has a limited international presence, SirsiDynix is a company many times larger with global sales and marketing efforts.
The acquisition of EOS International brings around 1,100 new libraries into the SirsiDynix fold, primarily special libraries, but also K-12 school as well as a number of small academic and public libraries. In recent years, EOS International has stepped up its marketing to academic libraries with a tailored version of its flagship EOS.Web Academic, which includes features for electronic resource management and academic reserves. With the addition of the EOS.Web sites, SirsiDynix now provides ILS products to more than 4,500 libraries, the largest installed base of the companies involved with public, academic, and special libraries. When assessing the impact of these libraries on the market potential of the new company, it should be considered that EOS International deals with much smaller libraries than SirsiDynix.
Following the acquisition, the combined company will employ around 365, with around 50 new personnel added to the existing SirsiDynix workforce. In terms of personnel employed SirsiDynix will still remain below OCLC with over 1,200 FTE, Ex Libris with 522, and Innovative with 360 plus the personnel associated with its new India Office. The combined revenues of SirsiDynix and EOS International will be the highest of any company in the library automation industry.
EOS International Corporate Background
EOS International offers EOS.Web as its flagship product, with specialized versions for academic, legal, and medical libraries in addition to its core version designed especially for corporate libraries. The company, based in Carlsbad, CA, stands as one of the pioneers of library automation for the corporate and special library sector.
Electronic Online Systems International, better known as EOS International, was founded in 1981 by brothers Scot and David Cheatham. Data Trek, as it was originally known, was formed to develop and market the software that David Cheatham developed to automate the corporate library of the Verbatim Corporation, a major manufacturer floppy diskettes, which were the state of the art of that time for computer files storage. The Card Datalog automation system, later renamed Manager Series, was first created for the CP/M operating system and ran on microcomputers that were at that time gaining in popularity for business applications. Following its success in the Verbatim Library, Data Trek marketed Card Datalog to other corporate libraries and eventually to types of libraries, including law, government, public, academic, and school. The software was ported to MS-DOS as that operating system became dominant following the release of the IBM-PC. The company was one of the first in the library automation industry to create software for Microsoft Windows, and today it specializes in Web-based products. Subsequent products developed by Data Trek included ULS Professional Series, a network-based integrated library system released in 1991 with features to support larger libraries; School Series, released in 1992 for K-12 school libraries; GoPAC, a Windows-based graphical online catalog; GLAS (Graphical Library Automation System), a full ILS developed for Windows released in Spring 1996; and eventually the current EOS.Web family of automation products with fully browser-based staff and patron interfaces, first released in August 2003.
EOS International has experienced several ownership transitions, mergers, and acquisitions. The company was originally owned by its co-founders Scot and David Chatham. Scot Chatham, with previous business experience in the insurance and financial services sector, joined the company on 1982 as its Chief Executive Officer, with David Cheatham serving as President. Between 1988 and 1996 EOS International had an evolving set of business relationships with Dawson Holdings PLC, a diversified UK organization founded in 1809, which at one time earned revenues in excess of $1 billion. In the mid-1990s, its portfolio included a variety of businesses, including Information Quest (electronic subscription service), Faxon Company, Turner Subscriptions, Quality Books, Liberia Ciencias Industria SL, Surridge Dawson (wholesaler and distributer of newspapers and magazines in the UK). Dawson Holdings was acquired by Smith News PLC in June 2011. Bryan Ingleby, then chief executive of Dawson Group, saw Data Trek as a vehicle to accomplish a vision of efficiently connecting libraries with suppliers, such as book companies, through automation systems.
Dawson Holdings PLC made its initial investment in Data Trek of around $1 million in 1988, funding new international offices and software development, including the company's first Windows-based product, GoPAC. Dawson Holdings made additional investments over the next eight years, gaining an incremental ownership stake in the company. By 1996, Dawson Holdings held about 80 percent interest in Data Trek. In July 1993, EOS International acquired The Assistant, a PC-based library automation system used by around 200 libraries from INLEX, Inc., a company based in Monterey, CA that had fallen into financial difficulties. INLEX, originally known as Electric Memory Inc., was founded in 1983 to market library automation systems for public libraries that operated on the HP/3000 line of minicomputers. In October 1993 INLEX/3000 was sold to Data Research, which was subsequently acquired by Sirsi Corporation. The Assistant was originally developed by Library Automation Products, Inc. and was acquired by INLEX in 1991. Interestingly, now both The Assistant and INLEX/3000 reside among the vestiges of library automation products in the corporate legacy of SirsiDynix.
In 1993 Data Trek developed a mechanism to automatically load invoices from Dawson Subscription Service directly into Data Trek via a process called Invoice on Diskette, a precursor to the EDI protocol used today to transfer business transactions from suppliers into automation systems. This Invoice on Diskette process was consistent with Dawson Holdings strategy to more closely link automation systems with library suppliers. In February 1994 Data Trek acquired the OASIS ILS from the Technology Division of Dawson Holdings, which was used by about 300 libraries, primarily in the UK and France. Following the sale, Data Trek provided support services and offered incentives to transition the libraries to its own products. By this time Dawson Holdings had increased its equity in Data Trek to about 50 percent. January 1996 saw a major transition for the company as it acquired IME Limited from its founders Kate Noerr, Peter Noerr and, and Helen Henderson. IME was a major provider of library automation products, offering the TINLIB library management system, which was known as The Information Navigator in the United States. Immediately prior to the acquisition, IME had announced a new system called Q Series, whose development was executed following the acquisition. The combined company was then renamed Electronic Online Systems International, or EOS International. By this time, Dawson Holdings had gained an 80 percent ownership stake in the company, with the founders retaining the remaining 20 percent. Following the sale of IME, Kate and Peter Noerr founded MuseGlobal in 1998 to develop content integration technologies, such as connectors for federated search platforms, which have been used not only in the library sector, but in a wide array of business and information systems.
In 1997 David Cheatham shifted to lead Information Quest, a sister Dawson Holdings company, as its President and CEO. Information Quest, based on technology created by EOS International, aimed to produce a search environment that addressed a large body of e-journal content. It had obtained agreements with publishers to index more than 4,000 journals. The concept, considerably ahead of its time, was not unlike the index-based discovery services popular today. It was never fully realized, and David Chatham rejoined EOS International in 2010.
Dawson Holdings divested EOS International from its portfolio in November 2000, transferring ownership to the company to its co-founder Scot Cheatham. Tony Saadat, formerly Executive Vice President of rival SydneyPLUS, also gained equity in the company at that time and served as Chief Operating Officer. During this period EOS International worked to reinvigorate the company, launching the flagship EOS.Web product suite to replace the aging Windows-based products. Saadat exited EOS International in April 2009 and has since founded the competing company Soutron Global.
In the 13 years since EOS International has operated under the ownership of Scot Cheatham, the company has focused on establishing EOS.Web as its flagship product, with a large percentage of its clients choosing its SaaS deployment option.
SirsiDynix ranks as one of the largest companies in the library automation industry, its products including the flagship Symphony and Horizon integrated library systems, the Enterprise discovery interface, and the Portfolio digital asset management platform. Recently introduced products include eResource Central for the management and patron access to e-books and other electronic resources, and the Blue Cloud suite of Webbased products that operate with Symphony and Horizon through the Web Services integration layer.
SirsiDynix has operated under the ownership of Vista Equity Partners since December 2006. Its nearly seven years as a portfolio company of Vista Equity Partners surpasses the investment interval of other private equity buy-outs in the library automation industry. In this same period, for example, Ex Libris has been involved with Francisco Partners, Leeds Equity Partners, and recently Golden Gate Capital.
The corporate history of SirsiDynix has been well chronicled in Smart Libraries Newsletter. The company was formed by the 2005 merger of two of the commercial firms that found their start developing library automation systems in the early 1980s. Sirsi Corporation was founded in 1979 by Jim Young, Jacky Young, and Mike Murdock. Dynix was founded just a few years later by Paul Sybrowsky, Keith Wilson, Jim Wilson, and Ralph Egan. Many other companies have come and gone during the intervening years, with SirsiDynix left standing as one of the survivors of the industry, as shown in the accompanying timeline of acquisitions and mergers.
This acquisition represents yet another transfer of ownership from founder-based to private equity as well as further consolidation of the industry. In October 2013 OCLC acquired the Dutch company Huijsmans en Kuijpers Automatisering from its founders, consolidating international library automation companies within OCLC EMEA. Innovative Interfaces made its change from founder ownership to the private equity fold in March 2012 through its acquisition by JMI Equity and HGGC. This move can also be seen in the context of the dynamics of the special library automation arena. In the course of the last five years, EOS International's main competitor, SydneyPLUS, has acquired many of the main players in this niche, including Cuadra Star, Inmagic, Questor Systems, Incite Software Solutions, Lookup Precision, and LawPort, completing the consolidation in June 2013 through the formation of a new company Lucidea. While this sector has proven to be challenging for the smaller companies, the transition from a fragmented array of small, independent companies to a more consolidated state of larger companies has come later than for the industry as a whole. EOS International operates in a very competitive business arena, with decreasing opportunities for automation products among the small and special libraries. The company saw peak interest in its EOS.Web products in the mid-2000s, with large numbers of contracts made, especially for existing clients migrating from its legacy products. Though new sales have tapered in the past few years, the installed systems and annual revenue have continued to grow.
From a technology perspective, EOS International finds a good match in SirsiDynix and its private equity owner. EOS International, like SirsiDynix, has been especially active in promoting its products through software-as-a-service. SirsiDynix supports more than 900 customers, some of which subscribe to multiple products, resulting in more than 2,000 hosted instances. EOS International supports more than 1,000 EOS. Web sites. Vista Equity Partners has a history of investments in technology companies in many different business areas that deploy their products via SaaS.
Since its acquisition by Vista Equity Partners, SirsiDynix has become more centralized and streamlined. The company has closed some of its operating facilities, including the original headquarters of Sirsi Corporation in Huntsville, AL and the former DRA headquarters in St. Louis, MO, centralizing most of its development and support in Utah. For a time, Sirsi- Dynix operated out of the former Dynix headquarters in Provo, UT, but moved into a new technology complex in Lehi, UT in December 2011. The company continues to operate international sales and support offices in Canada, Chile, France, the United Kingdom, Spain, Taiwan, and Australia and works with distributors in Saudi Arabia, South Africa, Turkey, and Portugal. Prior to the acquisition of EOS International, Sirsi- Dynix employed just under 300 personnel, a marked decrease from the 679 reported directly after the merger and prior to the process of integrating the two businesses and antecedent companies. In the same timeframe, the headcount of EOS International has dropped from 82 FTE to 50.
The acquisition of EOS International provides SirsiDynix an opportunity to expand its customer base, to incorporate new personnel into its organization, and gives it access to additional technologies. The shared strategic interest in software-as-a-service may present opportunities for both companies. In the current business environment, success in the perspective of current or future investors is often measured in terms of growth, whether accomplished organically through product sales or through strategic acquisitions. The true impact of this acquisition from the library standpoint will be seen in the retention or expansion of the customer base and in the technology innovations that emerge.
|Vista Equity Partners
|Sirsi Corporation with financing from Seaport Capital
|21st Century Group, Greanleaf Ridge, and Stratford
|Docutek Information Systems Inc.
|Epixtech renamed to Dynix
|Ameritech Library Systems becomes epixtech
|Data Research Associates
|CEA Capital Partners (later renamed to Seaport Capital)
|Progressive investments to gain equity from founders
|Data Research Associates
|Sobeco Ernst and Young
|Data Research Associates
|Ameritech Library Systems
|21st Century Group and Green Leaf Ridge
|Starlight Management System
|Data Research Associates
|Starlight (Australian firm)
|NOTIS Systems, Inc.
|OCLC Local Systems (LS/2000,DataPhase LS/2
|Systems Eyring Research Institute
|Dynix Systems founded
|Sirsi Corporation founded
“Eleanor Cannon: Data Trek's first client shares some memories.” Input/Output: Quarterly News Guide of Data Trek: 10 Issue 3 (Fall 1994).
Telephone interview with Scot Cheatham (Nov 5, 2013). Breeding, Marshall. “Automation Marketplace.” Library Journal, 2002-2013.
Press Releases from EOS International, SirsiDynix, and related companies.