U.S. startup buys two Canadian firms

The new American owner of two Canadian supply chain software companies it snapped up this month says they will become the nucleus of a solutions suite for small and mid-size companies that will open opportunities for resellers.

Colorado Springs-based Accellos Inc., a start-up that began six months ago with US$20 million in venture capital money, purchased Radio Beacon Inc. of Toronto, a provider of Windows-based warehouse management solutions through Microsoft Dynamics, SAP Business One and Sage VARs; and <font color=redHeadwater Technology Solutions, of Markham, Ont., a manufacturer of transportation management applications that sold its products direct.

Ross Elliott, Accellos’ chief technology officer, said in an interview that the firm intends to accelerate Radio Beacon’s reseller business and offer channel-ready Headwater products through VARs, while Headwater’s sales staff will be able to push Radio Beacon products to its customers.

“It’s a great merging of the strategic selling model with the channel selling model, giving us a broad set of products,” he said.

The price of the deals was not disclosed.

“This is a mall and these are the two anchor tenants,” Elliott said of the company’s first assets of any kind. Until the deals were closed, Accellos was “a management team in search of a company,” he said.

Accellos was founded in February by several former U.S. executives of NxTrend Technologies, an enterprise resource management supply chain company which was sold to what became Atlanta-based Infor Global Solutions in 2004.

Ex-NxTrend CEO Mike Cornell (now Accellos CEO), Elliott and three others “felt we could take our talents, find some good companies and go after a market place we felt was underserved — the small and medium market in supply chain,” Elliott said.

“Radio Beacon had been a partner of Infor’s for some time, so we knew the product was good, the folks were good, the channel was excellent and it addressed the marketplace we were interested in,” he said. It was approached in April.

Headwater was on a list of 140 potential acquisitions who were asked if they wanted to be bought. “Headwater was interested and was the right type of company,” Elliott said. By coincidence, it and Radio Beacon were in the Toronto area.

George Goodall, a senior analyst at Info-Tech Research of London, Ont., said the deals are an example of the second wave of consolidation in the supply chain industry to compete with companies such as Oracle.

“Point solutions just don’t make it,” he said. Accellos will inject money into Radio Beacon and Headwater, while the merged company will give their products broader exposure.

Radio Beacon partners should feel positive about the deals, he said, “because it speeds the continued viability of these companies.”

Ralf Mehnert-Meland, SAP Business One’s director of business development, said in a statement his company “is looking forward to working with RadioBeacon’s new managementteam to jointly expand SAP’s rapidly growing presence in the SMEmarketspace.”

“RadioBeacon is a long-standing member of ournetwork of select SAP Business One ISV partners offering critical vertical functionality to our customers,” he said.

With the purchases Accellos suddenly has three Toronto-area offices and about 110 Canadian employees.

That number, however, will decline shortly as the senior management of the two companies leave. Radio Beacon co-owner and president Dale Jeffries left the day the purchase was announced. The other co-owner, Tom Berrend, is staying and becoming Accellos’ chief architect.

Markus Luft, who was the majority owner, chair and CEO of Headwater, will become a member of the Accellos board.

Over time the Radio Beaon and Headwater names will disappear. However, Accellos CTO Ross Elliott said his company will keep the two Canadian businesses here and run them as “centres of excellence.”

He expects Accellos executives will spend three-quarters of their time here, enough to start thinking about renting an apartment.

Radio Beacon’s product, Radio Beacon WMS, combines radio frequency and bar code technology in a warehouse application that manages receiving, inventory control, product picking, shipping and labeling.

Headwater began as professional services firm specializing in project management and implementation of SAP and Microsoft enterprise solutions.

In 2005 it bought the assets of Delfour Corp., a Markham, Ont., maker of logistics solutions warehouses, which became Headwater’s supply chain division with products called SmartEnterprise and WarehouseLogic.

It also has a mobile fleet management application that runs on a BlackBerry enabling managers to track products from the warehouse to delivery.

Elliott expects Accellos to take a six-month breather before looking for another acquisition. “We’ve been pleasantly surprised with the wealth of supply chain execution software companies in the greater Toronto area,” he said. But he also said he expects some of the acquisitions will be companies outside North America.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including ITBusiness.ca. Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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