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Transactions

April 2008
Park Ridge, Illinois
has been acquired by
Armonk, New York


Background

When Guy Tagliavia founded InfoDyne Corporation, his mission was to make transactional market data blazing fast, highly available and massively scalable. Fifteen years later, InfoDyne counted among its customers some of the most prestigious and sophisticated financial services organizations in the world. The company was recognized as a technology leader in the rapidly emerging market niche of providing mission-critical, high-volume, ultra-low latency market data processing systems. And, Tagliavia had managed to fund growth from internally generated cash, avoiding taking funding from outside sources. He still owned the firm.



Overview

Over its history, InfoDyne had been approached by multiple suitors. They had spurned all of them. But, one day they received an offer so compelling that they decided to negotiate. A long and painful six months later, the deal fell apart. By that time, InfoDyne’s owners concluded that a sale did make sense. They believed that while the company had the products, services, and the technology required for success, it did not have the sales, marketing and distribution infrastructure required to take advantage of the growing market opportunity. Management believed that the timing was right: inbound inquiries by customers and suitors was at an all time high and Tagliavia believed that there could be considerable benefits if the company were to be teamed with either a financial firm looking to invest to build the company’s sales and marketing infrastructure or with a corporation with complementary strengths. To that end, InfoDyne retained Marlin & Associates (M&A) to advise the Company as it explored a wide range of strategic alternatives.

To begin, M&A staff interviewed senior management, reviewed the company’s commercial and financial results, examined the firm’s strategic plans and budgets and attempted to understand managements short and long-term goals. Then, with the material thoroughly digested and understood, M&A drafted a ‘Confidential Information Memorandum’ (CIM) designed to highlight the company’s strengths as well as to anticipate and answer questions of potential partners. With that memorandum complete, M&A approached a limited number of financial and strategic parties in four countries.

Several parties responded enthusiastically.

The financial investors were soon eliminated from the process, because their valuation metrics were surpassed by those indicated by three strategic players, each of which were deemed suitable potential partners. One party, based in the UK, offered an intriguing solution that included significant ongoing ownership by current management for at least three years. A second party, based in Europe, coveted not only InfoDyne’s product line and management team, but also wanted to make InfoDyne a center for their North American development efforts. Ultimately, the owners chose to sell the company to International Business Machines (NYSE:IBM), of Armonk, NY.

Under IBM’s auspices, InfoDyne products and people have become part of the IBM Software Group’s ‘WebSphere’ brand. InfoDyne has retained its core team in the Chicago area, and has become a focus for further development of real-time, ultra-low-latency trading products for WebSphere. Guy Tagliavia now leads an expanded team supporting IBM's strategy for further penetrating the financial services vertical.

M&A Role

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

Press

IBM Acquires M&A Client, InfoDyne, to Create World-Class Platform for Market Data Delivery

April 29, 2008

Armonk, NY – IBM (NYSE: IBM) today announced it has acquired InfoDyne Corporation, a privately held software company based in Park Ridge, Illinois. InfoDyne is a leader in high–speed platforms and data feed connectors which combined with IBM’s WebSphere technology will help clients extend transactional integrity to low–latency environments. Financial details were not disclosed.

InfoDyne provides software that is designed to enable today’s highly competitive trading firms and other venues to process exploding data volumes at microsecond response rates. InfoDyne’s market data delivery platform and rich feed handler portfolio take data from hundreds of sources and deliver it in a standardized format, helping customers to control escalating data feed costs.

"IBM is working with the world’s top financial firms on both the buy–side and sell–side, and with infrastructure providers and regulators, to help them adapt to the escalating volume and speed demanded by an increasingly automated and globally integrated industry," said Tom Rosamilia, general manager, IBM WebSphere. "The addition of InfoDyne’s capabilities strengthens IBM’s product portfolio in providing an exchange–neutral platform, with high–speed connectivity that gives firms faster access to market data, accelerates their ability to execute and complete trades, and enhances the flexibility required to comply with both current and future regulations."

The widespread adoption of electronic trading has driven exponential growth in transaction and data volumes. Today, an estimated four billion shares per day* trade on the New York Stock Exchange, NASDAQ and regional exchanges, six times the volume on these same exchanges five years ago.

Despite this sixfold increase in data volume, today’s traders insist that their information technology (IT) infrastructure provide nearly instantaneous execution speeds and data flow. These low–latency environments are constantly monitored to ensure that the raw data and analytics required to support the trading desks are delivered quickly and reliably. Market data is the fuel for these environments, and firms are demanding high–speed systems that can complete all components of a complex evaluation and potential transaction in a millisecond or faster.

Algorithmic and model–driven trading is now being applied far beyond just equities, encompassing multiple asset classes including FX, fixed income, commodities and over–the–counter (OTC) derivatives, in addition to complex cross asset class trading. Because the failure of any single trade component directly affects the overall trading position, the pressure to have connectivity and systems that are fast enough to complete the end–to–end process across all components of the trade lifecycle is immense. The percentage of fills per order has become a key factor in assessing potential profitability and latency for institutions who wish to remain competitive.

In this environment, systems and software not only need the ability to process millions of messages per second from multiple feeds in microseconds, but also require interoperability with a firm’s middle– and back–office applications. The integration of InfoDyne’s extensive feed handler capabilities and data platform with IBM’s messaging and middleware portfolio allows financial firms to digest the enormous amount of data available and use it to their advantage.

"InfoDyne was founded on the principle of using technology to ensure zero tolerance for latency and has developed a platform and supporting software and services specifically designed to provide a competitive advantage to market traders," said Guy Tagliavia, CEO, InfoDyne Corporation. "The combination of InfoDyne and IBM will result in one of the most powerful software and services offerings for market traders in the financial services industry."

InfoDyne complements IBM’s broad set of software products for the financial markets industry, for example, WebSphere Front Office for Financial Markets, WebSphere MQ Low Latency, and WebSphere DataPower appliances. Together, the IBM and InfoDyne offerings provide a high–speed market data delivery platform designed to help accelerate the speed and increase the throughput and reliability of financial data transmission. Additionally, WebSphere eXtreme Scale provides an in–memory grid across multiple servers with transactional integrity, transparent fail–over, and constant response times.

The acquisition of InfoDyne further supports IBM’s strategy for offering a comprehensive portfolio of industry–focused software for real–time needs, as underscored by the company’s recent purchase of AptSoft technology and acquisition of Solid Information Technology in January 2008. AptSoft’s technology, which is part of IBM’s WebSphere Business Events software, supports event processing and business applications such as algorithmic trading. Solid Information Technology software provides real–time information access, using an in–memory database, and persistence support for applications requiring high throughput.

Combined with InfoDyne, IBM now offers a comprehensive software portfolio to address the need for real–time and ultra–high speed data delivery and consumption.

InfoDyne products will become part of the IBM Software Group WebSphere software brand

Marlin & Associates initiated the transaction, helped manage the process, assisted in the negotiations and acted as exclusive strategic and financial advisor to InfoDyne.

Source: The TABB Group’s LiquidityMatrix

About IBM:

For more information: http://www–03.ibm.com/industries/financialservices/doc/content/landingdtw/1687536103.html

About InfoDyne:

For more information: http://www.infodyne.com/

About Marlin & Associates

Founded in 2002, Marlin & Associates New York LLC (“M&A”) is a boutique investment banking and strategic consulting firm focused on providing highly strategic, transaction–related services to U.S. and international middle–market firms engaged in technology, information, online media and business services. The firm is based in New York City, with offices in Washington, DC and Toronto, Canada.

The firm has been 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. M&A’s professionals have advised on over 200 successfully completed transactions in the technology and information services sector.

For more information, go to www.MarlinLLC.com.

CONTACT:

(212) 257–6300 | Contact@MarlinLLC.com | www.MarlinLLC.com

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