For more than 15 years, Endace has provided high-speed, network recording and visibility solutions to monitor and protect some of the world’s largest and most sophisticated networks.
Stuart Wilson, CEO, and Andrew Harsant, CFO, recently led a management buy-out (MBO) of Endace. Stuart and Andrew talked to us about Endace’s journey, the MBO, and their experience working with Simmonds Stewart.
the endace story
Endace was founded in 2001 after the success of an academic research project at the School of Computing and Mathematical Sciences at the University of Waikato. Originally supplying products, Endace evolved to selling complete network visibility and recording solutions for use in the world’s most demanding network environments. Endace’s customers include global banks, telcos and service providers, media and broadcast companies, government and defence departments and large enterprises.
Endace was listed on the AIM market of the London Stock Exchange in 2005, and after 8 years as a listed company was purchased by Californian networking solutions firm Emulex in 2013 for around $150 million. Emulex, in turn, was sold in 2015 to Nasdaq-listed Avago Technologies, a global leader in the analogue semiconductor market. Together Stuart, who had been Endace’s CTO for more than a decade, and Andrew, running the finance function for five years, decided that, as they knew the business and all the numbers back to front, they should take Endace back into private ownership. Working with Avago senior management they negotiated an MBO on November 1st 2015.
Despite being involved in the due diligence for many m&a projects, this MBO was Stuart and Andrew’s first time negotiating an m&a transaction. Having to operate the business, keep the negotiations private, and negotiate a complex agreement for the acquisition of a company with subsidiaries around the world meant they needed the help of experienced lawyers.
Since the MBO, demand for Endace’s technology has accelerated globally with some large customer installations in government and commercial sectors achieved. Stuart attributes this in part to an increase in publicity surrounding high profile data breaches being reported by the media.
working with simmonds stewart
Stuart and Andrew have both worked with a number of lawyers over their time with Endace, and in previous roles, but in the lead-up to the MBO wanted a firm that was a better cultural fit for a small-medium, privately-owned business.
Stuart knew Simmonds Stewart partner Averill Dickson from her time as Group Legal Counsel/Company Secretary at Endace in the mid-2000s, and knew that she understood the business. Stuart and Andrew also thought that Simmonds Stewart seemed like a good fit overall.
The MBO was a challenging transaction, involving a whole bunch of stuff we had never seen before. In dealings with previous firms, Stuart had found that some law firms just give you information and let you make your own decisions. What Andrew and Stuart liked about working with Simmonds Stewart was that not only was partner Julie Fowler able to explain what it all meant, she also wasn’t shy about making recommendations – which was exactly what they were looking for.
The Endace story is a bit of a rollercoaster ride – from university project, to small private company, through an IPO and 2 takeovers, and back to a private company. Despite all of this upheaval, many of the employees from the period prior to listing remain with the company. Endace is also committed to NZ Inc – Stuart credits Callaghan Innovation and NZTE for the support they have provided Endace over the years, and as a way of giving back Endace now sponsors both the Hi-Tech Awards and the New Zealand Export Awards.
In Andrew’s view, it’s important for a business to find lawyers like Simmonds Stewart, who have the skills and experience to deal with complex, international transactions, and can identify what the likely problems and potential solutions are.
Simmonds Stewart looks forward to working with this 100% NZ owned company as it takes its next steps as a world leader in the network recording industry.