Austin-based Phurnace Software acquired by Houston company
By Lori Hawkins
AMERICAN-STATESMAN STAFF
Austin-based Phurnace Software, which began as a class assignment by a University of Texas MBA student, has been acquired by BMC Software of Houston.
Financial terms of the deal, announced Thursday, were not disclosed.
Phurnace sells software that simplifies the installation of applications based on the Java programming language.
The company was started in 2006 by Daniel Nelson as a class project. He and Robert Reeves, a UT economics major, teamed up to pursue the idea, and their business plan won the 2006 Moot Corp competition at the University of Texas McCombs School of Business.
"This is truly a Texas-grown company, from winning Moot Corp to being a member of the Austin Technology Incubator to raising money from Texas investors," Phurnace chief executive Larry Warnock said . "Now we're excited to be acquired by another Texas company, which is going to rapidly accelerate our growth."
Phurnace is the latest in a string of acquisitions of Austin tech companies by bigger players.
Last month, Lombardi Software Inc., an Austin developer of business process management software, was acquired by IBM Corp. for an undisclosed sum. In November, LifeSize Communications Inc., which sells videoconferencing equipment, agreed to be bought in an all-cash deal by Swiss company Logitech International for $405 million, one of the highest prices paid for a local company in recent years.
Phurnace has raised $5 million from backers including Austin investor John Hime, S3 Ventures of Austin and DFJ Mercury , a Texas-based venture fund affiliated with Draper Fisher Jurvetson of Menlo Park, Calif.
BMC said Phurnace's 21 employees will remain on board. In addition, BMC plans to expand both the product and staff, said Scott Fulton , BMC vice president of service automation products.
"This is a small company with a brand-new, powerful technology, and to the best of our assessment, this is the only one out there that's really proven with large enterprise customers," Fulton said.
Phurnace significantly reduces the time that large companies spend rolling out and upgrading Java applications, he said. "What used to take weeks or months to accomplish, Phurnace can achieve in minutes or hours," Fulton said. "Considering that some companies, like banks, upgrade custom applications every few weeks, that's a dramatic difference."
BMC plans to invest in the Austin team, including adding development positions, Fulton said.
"In addition to the technology, the thing we liked about the company is the DNA of their technical team, and we want to build on that," he said.
Phurnace, which doesn't disclose revenue, has two dozen customers, including Discover Financial Services, American Airlines, Union Bank of California and the State of Texas.
BMC, which sells information management software and services to corporate customers, has 5,800 employees worldwide — including 264 in Austin — and posted revenue of $1.9 billion in fiscal 2009.
Warnock said BMC provides access to a global sales force and customer base as well as product development resources.
"People might wonder if this will take the wind out of our sails and eliminate jobs. In fact, it's just the opposite. BMC is keeping everyone, and we're going to keep our location downtown (on Rio Grande Street) — and we're going to be growing a lot faster than we would have been able to as a private venture-backed company," said Warnock, who will join BMC as senior director of corporate development.
Although the sales price was not disclosed, Warnock called it "a very strong above-market return for all of our investors. They are happy, our employees are happy and our acquirers are happy. The team is staying in place to fulfill this vision that we've always had."
Source: statesman.com
