Dublin company in €15m buyout deal

DUBLIN software company Vistatec has been taken over in a management buyout deal worth around €15 million.

The company, which employs 120 people customises software packages to suit the language requirements and tastes of local markets. Its clients include leading international names such as Kodak, Computer Associates, Cisco Systems and Hewlett Packard, with around 50% of revenues coming from the American market.

Company founder Mervyn Dyke, who held a majority shareholding since setting up the Kilmainham-based company in 1997, will stay with the business as a consultant. Former finance director Thomas Murray, who headed the management buyout approach replaces him as chief executive.

State business development agency Enterprise Ireland has a small shareholding in the business and has backed the deal and will retain its stake.

Vistatec recorded full-year revenues of around €15 million in the year to June 2004, generating pre-tax profits of €1.8 million. It has been profitable every year since it was set up and saw sales grow by over 150%, on average, for each of the last three years. It had no bank debt outstanding when the deal was signed late last week. Industry sources said a valuation of between six and eight times’ earnings would be typical in the sector.

The management team, which includes localisation manager Patrick Kelly, IT manager Jerry Lane and chief technology officer Phil Ritchie, will hold a combined stake of over 90% of the business. Debt financing was provided by Bank of Scotland (Ireland) but the team did not seek the help of venture capitalists or other outside investors to take an equity stake.

Software localisation has become a major growth area for specialist Irish companies. The market has developed on the back of international clients needing to adapt their software whenever they enter a new market or language area.