Two local software companies have taken steps that position them better for possible future initial public offerings.
Canoga Park-based E Team Inc., a provider of crisis-management software, last week beefed up its management team, while El Segundo-based iRise Inc. received $15.8 million in late-stage funding and added a venture capitalist to its board.
E Team elevated John Tullie, who joined the company as a vice president in 2002, to chief executive, and named venture capitalist Lawrence Jordan as its board chairman. It also brought two other software industry veterans onto its board.
Top-loading the management team of a young company is often a signal that it’s preparing to take its shares public, but Tullie who helped bring Irvine-based Continuus Software Corp. to an IPO in 1999 said E Team has no IPO plans at the moment. “Obviously at some point down the road, it’s not out of the question,” he said. (Continuus is now owned by Telelogic AB of Sweden.)
E Team’s software allows emergency responders to coordinate with each other in times of crisis. The company points to its rapid expansion during 2004 as reasons for the management change: E Team was heavily involved in the Summer Olympics in Greece, and handled emergency coordination for the March G8 Summit in Sea Island, Ga., in addition to working both the Republican and Democratic National Conventions. It’s expanding into the European market and has been working with the Thai government in its Tsunami disaster response efforts, Tullie said.
Though the company does not disclose financial information, Tullie said the company was profitable in all four quarters of 2004.
Meanwhile, iRise raised $15.8 million from Morgan Stanley Venture Partners and named venture capitalist Brooke Seawell to its board.
Based in Menlo Park, Seawell previously worked at Synopsys Inc., which he helped take public in 1992, and at NetDynamics, where he helped arrange an acquisition by Sun Microsystems Inc.
IRise makes products that allow custom software applications to be simulated and tested before clients have to invest in the expense and time of actually writing the software code.
The closely held company does not disclose revenues or profitability numbers, but managed to raise $28 million in funding from 2001 to 2004. Its 100-customer portfolio includes Sprint Corp., Boeing Co., Bank of America Corp., AIG and Home Depot Inc. Morgan Stanley Venture Partners is its first institutional investor.
Gartner Inc. research director Matt Light said he expects the Morgan Stanley investment to spur other similar deals. “You see a substantial investment like this, and there will be a flurry of other small companies following on the heels of innovators like iRise,” Light said.
Hilary Potkewitz
Kilroy Pay Draws Criticism
Kilroy Realty Corp.’s generous compensation plan for its senior executives may cut into its fourth quarter earnings, according to analysts at Banc of America Securities.
This month, Banc of America analysts John P. Kim and Ross Nussbaum, who have had a “sell” rating on Kilroy stock since November, lowered their estimate of the company’s fourth quarter funds from operations by 15 cents per share because of the plan.
Kilroy’s compensation plan awards its senior executives bonuses based on the growth in the company’s stock price, which increased by $4.72 a share in the three-month period ended Dec. 31.
The analysts said the plan calls for $25 million to $30 million in payouts over three years although the accrual may be reduced if Kilroy’s stock price declines.
In 2003, John B. Kilroy Jr., the company’s president and chief executive, drew a salary of $875,000 and received a $1.1 million bonus. He also received stock options worth nearly $2.1 million, according to the most recent company filings with the Securities and Exchange Commission.
Kilroy shares peaked at $44.08 on Dec. 28, and have risen 31.5 percent over the past 12 months, adjusted to reflect dividend payments. They closed on Jan. 19 at $40.30.
Andy Fixmer
