Alias casts investment firm as acquisition partner

American private equity investment firm Accel-KKR paid US$57.5 million Thursday to acquire Alias, an Academy Award-winning maker of 3D graphics technology.

Alias, which is a wholly-owned, independent company of Silicon Graphics

Inc. that has operated as a software firm within a hardware company, has been looking for a suitor for some time, explained Doug Walker, president of Toronto-based Alias, which serves the entertainment marketplace, games industry and multimedia sector.

“”What’s not gone away is the limitation of working within a hardware company’s model,”” he said, which years ago meant being restricted to operating on SGI hardware platforms and accepting SGI’s focus on its hardware business. Moving forward, he said, Alias will be able to compete more like a software and services company naturally does, which includes having “”the latitude to invest”” and dedicating all resources to software development.

“”The whole purpose for putting this new relationship together is to create an environment where we have the investment and the expertise to . . . create new products and services for our customers,”” said Walker.

For example, in a process called pre-visualization, filmmakers are trying to understand before they start shooting what the films will look like, explained Walker. He said in the future, companies will likely be buying tools from Alias, which has more than 50,000 customers like Disney and Pixar, that help in this area.

Walker said Alias chose Accel-KKR because it was looking for a company that believed in its views on important trends and technologies in the software market, and also had the right industry knowledge and capitalization to meet Alias’s goals.

The investment by Menlo Park, Calif.-based Accel-KKR will translate into money to develop these technologies faster in-house, allow Alias to buy the technology to advance its business or permit it to purchase companies that manufacture the solutions, he said.

The amount of money Accel-KKR, which focuses on technology firms, will pour into Alias’s business activities over time is uncertain. It will depend on the needs of customers, the size of market opportunities associated with proposed technologies, the prospect of reasonable returns and long-term payback for investors, Walker said.

Alias surveyed buyers of its products about their opinions on the acquisition, which Walker said will help it gain more customers by introducing more and better-suited solutions to broader markets over the next five years.

Walker explained that working with Accel-KKR, founded by venture capital firm Accel Partners and private equity firm Kohlberg Kravis Roberts and Co., “”We’ll have a better knowledge of what’s happening with technology around us.”” He adds KKR will also bring “”a tremendous amount of expertise in the area of mergers and acquisitions to the table.””

Accel-KKR, in turn, was interested in Alias because of its strong leadership, great management team and promising market, said Tom Barnds, managing director of the private equity investment firm. “”The market that Alias is in is benefiting from a lot of technical improvements, which . . . has improved the experience for consumers in a host of different entertainment-related areas.””

Alias’s strong balance sheet, as well as cashflows that can be re-invested in the business to guarantee its technology is the best in the market, also represent a “”tremendous opportunity to grow,”” Barnds said.

Moreover, Alias boasts a solid “”track record of working with customers from a product and service standpoint,”” as well as a product and service distribution system that’s leading the market, added Ben Bisconti, managing director of Accel-KKR.

As with all of Accel-KKR’s investee firms, the private equity investor will hold seats on Alias’s board of directors and provide strategic advice.

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