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Transactions

December 2009
Chicago, Illinois
has been acquired by
Chicago, Illinois


Background

In the 1980s, when Tony Kolton was a young accountant at Northwest Industries, he met and befriended a young PhD computer whiz named Shamim Naqvi. Over the years they kept in touch. Tony obtained a master’s degree in tax and a law degree, but diverted his career to trade options on the floor of the Chicago Board of Options Exchange (CBOE). Shamim Naqvi moved on to Bell Labs, which, for a time, allowed him to work at Microelectronics and Computer Technology Corporation (“MCC”) the first, and - at one time - one of the largest, computer industry research and development consortia in the United States. Under the leadership of Admiral Bobby Inman, whose previous positions had been Director of the National Security agency and Deputy Director of the Central Intelligence Agency. MCC was an American answer to Japan's Fifth Generation Project, a large Japanese research project aimed at producing a new kind of computer by 1991. MCC was part of the Artificial Intelligence boom of the 1980s.

In 1987, Tony Kolton recognized an inflection point in the stock markets and sold his positions before the markets crashed. He was searching for next. At about that time, his friend Shamin Naqvi told him of amazing advances in artificial intelligence that he was working on.

In 1989, with MCC winding down, Tony and Shamin teamed with Jan Lukens, then a senior marketing manager at Coca-Cola, to form Logical Information Machines (“LIM”). In short order they added expertise from three other MCC alumnae: Ravi Krishnamurthy, PhD, who had helped design DB2 in 1980 at IBM’s Tom Watson Research Center; Dr. Ruben Gamboa, PhD and; Danette Chimenti.

Together the team created a proprietary time-series database technology that they called “Historis”; and a desk top application they called the “Market Information Machine” (“MIM”) that makes use of “Proloq” a near-English query language developed by Shamim Naqvi and helps clients make sense of the mountains of information contained in the data base.

Over the next few years, LIM evolved from a software company to become a leading provider of data and analytics for some of the world's largest asset managers, banks, oil companies, power and natural gas trading firms, utilities, and agriculture and commodities trading firms. The company collects, unifies, and conducts quality assurance on data from more than 180 providers in the energy, financial, and agriculture sectors and provides clients with one central source for data intelligence and analysis. Clients also have the flexibility to use LIM's tools for analyzing their own proprietary data, which they may have been collecting for years. Traders and risk managers relied on LIM as their information hub. The Company employed people in Austin, Houston, Chicago, New York, and London.



Overview

As is the case with many successful companies, private equity firms, venture capitalists and strategic corporations regularly approached LIM to see if they would consider exit. For years the company declined. But, 2009 was the 20th anniversary of LIM’s founding and Tony Kolton and his partners decided that the timing was right to consider exit.

Before engaging Marlin and Associates the Company entertained sequential discussions with three strategic firms and two financial firms. For one of these discussions, LIM hired an outside advisor. For different reasons, none of the discussions resulted in a transaction. That’s when they decided to hire Marlin & Associates.

M&A helped the owners and Management conduct a disciplined process that led to discussions with more than fifteen potential partners and ultimately generated multiple indications of interest.

On December 11th 2009, Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today announced it has entered into a definitive agreement to acquire Logical Information Machines, Inc. (LIM). The transaction closed on December 31st 2009.

LIM is a pioneer in providing market pricing data, securities reference data, historical event data, predictive analytics, and advanced data management solutions that help customers manage large sets of time-series data. The company collects, unifies, and conducts quality assurance on data from more than 180 providers in the energy, financial, and agriculture sectors and provides clients with one central source for data intelligence and analysis. Clients also have the flexibility to use LIM's tools for analyzing their own proprietary data, which they may have been collecting for years.

Joe Mansueto, chairman and CEO of Morningstar said: "LIM is a financially healthy firm with a strong record of success, subscription-based revenue, and a large, stable client base. We were attracted to LIM because it complements our core data and software businesses and provides a new distribution channel for Morningstar. Additionally, we serve many of the same financial services firms, but we're working with different departments within those organizations. By joining forces, we can offer our clients more robust services from one provider."

"Becoming part of Morningstar will help us expand our business, especially outside the United States where we're in the early stages of developing our offerings," said Anthony "Tony" Kolton, co-founder, president, and CEO of LIM. "We see many opportunities in Asia, for example, which originates a significant amount of the world's trading and where Morningstar has been operating for more than a decade."

M&A Role

Marlin & Associates was pleased to have initiated this transaction, helped manage the process, assisted in the negotiations and acted as exclusive strategic and financial advisor to LIM.

Press

M&A Client Logical Information Machines Agrees To Sell To Morningstar

December 14, 2009

M&A Client Logical Information Machines Agrees To Sell To Morningstar
 
Morningstar, Inc. to Acquire Chicago-based Logical Information Machines, Inc., Leading Provider of Data and Analytics for the Energy, Financial, and Agriculture Sectors

CHICAGO, Dec 11, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today announced it has entered into a definitive agreement to acquire Logical Information Machines, Inc. (LIM), a leading provider of data and analytics for the energy, financial, and agriculture sectors, for $51.5 million, subject to post-closing adjustments. LIM had revenue of approximately $20 million for the last 12 months. The companies expect to complete the transaction this month, subject to customary closing conditions, which include approval by LIM's shareholders.

LIM is a pioneer in providing market pricing data, securities reference data, historical event data, predictive analytics, and advanced data management solutions that help customers manage large sets of time-series data. The company collects, unifies, and conducts quality assurance on data from more than 180 providers in the energy, financial, and agriculture sectors and provides clients with one central source for data intelligence and analysis. Clients also have the flexibility to use LIM's tools for analyzing their own proprietary data, which they may have been collecting for years.

LIM's clients include some of the world's largest asset managers, banks, oil companies, power and natural gas trading firms, utilities, risk managers, and agriculture and commodities trading firms.

"LIM has been in the data management and aggregation business for 20 years and has developed a proprietary time-series database technology that serves as an essential hub for trading desks and risk managers at many Fortune 500 companies. LIM's solutions are deeply integrated with its clients' platforms, which make them invaluable to customers," said Joe Mansueto, chairman and CEO of Morningstar.

Mansueto added, "LIM is a financially healthy firm with a strong record of success, subscription-based revenue, and a large, stable client base. We were attracted to LIM because it complements our core data and software businesses and provides a new distribution channel for Morningstar. Additionally, we serve many of the same financial services firms, but we're working with different departments within those organizations. By joining forces, we can offer our clients more robust services from one provider."

"Becoming part of Morningstar will help us expand our business, especially outside the United States where we're in the early stages of developing our offerings," said Anthony "Tony" Kolton, co-founder, president, and CEO of LIM. "We see many opportunities in Asia, for example, which originates a significant amount of the world's trading and where Morningstar has been operating for more than a decade."

LIM was founded in 1989 and has approximately 80 employees in Austin, Houston, Chicago, New York, and London. Once the acquisition is completed, LIM will become a wholly owned subsidiary of Morningstar and Kolton will serve in an advisory role. Kishore Gangwani, currently senior vice president, corporate sales and business development for Morningstar, will become president of LIM. He will report to Tao Huang, chief operating officer of Morningstar. Gangwani has worked for Morningstar for almost a decade and is responsible for building and maintaining the company's key global client relationships. Before joining Morningstar, he worked in management consulting and manufacturing. He has an MBA from the University of Chicago and bachelor's and master's degrees in chemical engineering.

Marlin & Associates New York LLC acted as strategic and financial advisor to LIM's investors.

About Morningstar, Inc. 

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on more than 325,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 20 countries and minority ownership positions in companies based in two other countries.

About Marlin & Associates

Founded in 2002, Marlin & Associates is a boutique investment banking and strategic consulting firm specializing in acquisitions and divestitures of U.S. and international middle-market firms that provide information technology, digital information and healthcare-related products, technology and services. The firm is based in New York City with offices in Washington, DC and Toronto, Canada.

M&A’s professionals have advised on more than 200 successfully completed transactions. The firm is the recipient of numerous awards, including “Middle Market Investment Banking Firm of the Year,” “Middle Market Financing Agent of the Year – Equity” and numerous “Deal-of-the-Year” awards.

CONTACT: 

Contact@MarlinLLC.com | +1 (212) 257-6300

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