Dan Haar: Six deals made 2017 good for tech in Connecticut

Datto CEO Austin McChord in January 2016 at the company’s headquarters in Norwalk, Conn. Datto CEO Austin McChord in January 2016 at the company’s headquarters in Norwalk, Conn. Photo: Matthew Brown / Hearst Connecticut Media Photo: Matthew Brown / Hearst Connecticut Media Image 1 of / 1 Caption Close Dan Haar: Six deals made 2017 good for tech in Connecticut 1 / 1 Back to Gallery

It was a light moment at the Connecticut Technology Council board meeting in October when Bruce Carlson, the group’s CEO, quipped the fastest way to sell a company with favorable terms was to join the council’s board.

It was that kind of year in 2017 for the tech sector in a state economy otherwise starved for good news. At least six big sales closed for Connecticut tech businesses, led by $1.5 billion for Datto in Norwalk.

Five had an executive on the tech council’s 48-member board. More to the point, all six will stay put with the goal of growing in their home state.

Datto, the business data protection and connectivity firm, sold Oct. 26 to Vista Equity Partners in a deal that included a merger with another firm, Autotask.

The others were Core Informatics, a Branford medical data firm that sold to Waltham, Mass.-based Thermo Fisher Scientific for a reported $94 million in March; iDevices, of Avon, a maker of networked consumer devices, bought by Hubbell Inc. of Shelton in April; eTouches, a Norwalk-based events management software firm that took on a private equity majority owner in May; and in December, the aerospace and defense business of Oxford Performance Materials, in South Windsor, picked up by Hexcel Corp., of Stamford; and Greenskies Renewable Energy, a solar installer based in Middletown that sold to a California company consolidating the commercial and industrial end of the industry.

“This is a story that’s not being told in Connecticut,” Carlson said. “It’s been a great year for tech relative to transactions.”

What’s unusual is not the number of sales, though six is fairly high; nor the size of the deals, though most, if not all, are in the tens of millions of dollars or higher; nor the fact that not one of the deals led to an exit to Boston, New York, Silicon Valley or elsewhere, as has happened with sales such as the troubled Higher One that left New Haven a few years ago.

Rather, the news here is the combination of all three factors. Carlson believes the trend is a strong harbinger for the software and info-tech industries in Connecticut, which have seen previous successes, notably in a burgeoning New Haven cluster.

Most of the six have been recognized by the tech council as Marcum Tech Top 40 fast-growing firms.

One of the companies that sold, eTouches in Norwalk, which develops software to run events, did not previously have a majority shareholder. Terms were not announced, but the funds that came in will infuse the company with $154 million in new capital, according to reporting by my colleague at Hearst, Alexander Soule.

“I think Connecticut, despite all of the doom and gloom, who’s moving out and all that, Connecticut is happening and we should pay attention to companies like ours,” said eTouches CEO Oni Chukwu.

Chukwu has founded or led four startup or development stage companies since immigrating from Nigeria and earning an MBA from the University of New Haven a quarter-century ago. That included Triple Point, a commodities management software firm based in Westport that grew to 1,100 people at 16 locations.

The $1.5 billion Triple Point sale in 2013 was one of the largest in the world in enterprise software, and Triple Point is still here.

Etouches has its head office in a former brewery, with about 100 of its total staff of 360, Chukwu said. The firm has seven locations around the world and about half its sales outside North America.

The new majority owner is HGGC, a private equity partnership that includes former NFL quarterback Steve Young, who grew up in Greenwich.

“For us it was not a cash-out exercise, to be clear,” Chukwu said. “What we are about is building this business ... The idea of bringing in a global partner was to help us manage a growing enterprise.

And Norwalk remains the focus.

“Norwalk is a beautiful place,” Chukwu said. “We have a lot of millennials, people who have ideas and are enterprising.”

One of the draws?

“You’re not in Manhattan, struggling with everybody else, where you can’t afford to live, commuting three hours…South Norwalk is like living in the city. ... There is a very good vibe around the city.”

Some commute from New York to Norwalk, he said.

And in that image, we have a picture of the Connecticut recovery, if the poor little rich state can ever get out of its own way.

We tend to focus on the fiscal meltdown, the exit of large companies and mostly, the lack of job creation in Connecticut — and those issues all matter greatly.

These six tech sales, all with a strong result for Connecticut, tell us there is a route to success and maybe we’ll see it.

Chukwu said leaving Connecticut never came up in talks.

“Where would you like to raise your kids,” Chukwu asked, “here or in Florida?”

The Oxford deal brings a stronger foothold in additive manufacturing — in this case, in high-performance, polymer-based plastics — to a Fairfield County company, the publicly traded Hexcel. About 25 people connected with the business remain in South Windsor and Hexcel has not announced plans to move the operation.

Hexcel had invested $25 million in Oxford previously, and has reduced its equity ownership in the rest of Oxford, which includes a materials business and a biomedical components business. The aerospace and defense deal includes a licensing agreement, said Scott DeFelice, the Oxford CEO, who remains with the divisions that were not part of the transaction.

Why do the deal? Focus, partly, and partly Hexcel’s larger size, DeFelice said, “the markets that we can effectively penetrate ... need a multimillion dollar balance sheet.”

And, again, Connecticut is a good place to do that. “Connecticut is pretty good at nurturing companies. It has the intellectual capital, legal, financial, technology, government infrastructure,” DeFelice said.

The fiscal crisis and what he called a poor energy infrastructure are issues, he said, but added, “We definitely think there is more value to being in the infrastructure here than trying to chase labor costs or energy costs.”

That’s a story being told through these six tech business sales of 2017.

Chances are these deals won’t all work. But if the trend catches on and leads to large-scale job creation in 2018, we will look back on these deals as momentum-builders.

dhaar@hearstmediact.com