International reseller Software Spectrum has sold its Australian and New Zealand professional services division to the local operator in a management buyout.
The buyout, which involves the company's 55 employees, all of whom will become shareholders in the new business, was spearheaded by former Software Spectrum Asia-Pacific managing director David Colwin.
Software Spectrum decided to divest its $50 million worldwide professional services business because of its inability to turn a profit.
"The business has achieved good growth, but we have never been able to run it profitably, so we decided to sell the division," Software Spectrum president of product services Roger King, told ARN from the US. "It enables us to focus 100 per cent on our two core businesses; support services and software."
The company has closed eight of its 14 offices worldwide, while the six profitable locations will be bought out. King revealed Software Spectrum has signed a letter of intent with a North American company for the Northern Hemisphere operations. The local company, which will be rebranded as Naratis, will be made up " of three profitable locations in Melbourne, Sydney and Wellington.
King said that, although some offices had operated very successfully, the division had never created the synergies the company had hoped for.
"Globally, it hadn't worked because the decision on how to employ professional services is a local decision while the low-end work, commodity services and the like are scattered around the world.
"It was a tough decision, but it is better for the business to move forward and it is better for the employees to be part of a successful team as opposed to a struggling part of the company."
Software Spectrum is now looking for a managing director to replace Colvin in the company's software reselling business.
For Colvin, the management buyout is a case of déjà vu; he was one of the two people who sold the business to Software Spectrum in 1996. He plans to develop the business at high growth for three years and then take the company to a public offering.
"We have had, and continue to have credibility in the software integration business, but have also been moving into knowledge management and e-business related areas," he said. "It is more exciting for the business in terms of opportunities to go forward."
He said the strength of the company's Australasian business would hold the company in good stead.
"The consulting business is very much a people business, which is why it is difficult to translate onto a global scale."