Versata is a privately held software company, one of several business units under the ESW Capital umbrella. Versata acquires underperforming or financially struggling enterprise software companies, integrates them into their portfolio, and makes operational changes to improve the viability and performance of the companies.
History
Early years (1991–2000) This company was founded in 1991 with the name Image Innovations; Naren Bakshi was co-founder and president, Kevin Fletcher Tweedy was vice president of technology, and they sold a development tool set named Image Application WorkBench that worked with Plexus Software's imaging platform. In 1997, the company name changed to Vision Software. They sold a small suite of software: Vision Builder for accelerated coding; and Vision StoryBoard Pro for creating software documentation. In 1998, their flagship product was a Java development tool named Vision JADE. In January 2000, the company changed names again, this time to Versata, and their e-business automation system, Versata Logic Suite, had three components: Versata Logic Server to host business rules written in Java, Versata Studio for developing the business rules, and Versata Connectors for connecting the logic server to IBM database servers.
Public company (2000–2006) They went public in March 2000 during the dot-com bubble, raising about $94 million and reaching a market capitalization of over $2.5 billion despite reporting just $13 million in revenue and a $21 million loss in the prior year. In November 2000, Versata expanded into the business workflow area with the acquisition of Verve, Inc. and its workflow management system by the same name. From early 2001 through mid-2003, Versata's revenues were in quarter-over-quarter decline until Alan Baratz took over as CEO. Five consecutive quarters of growth followed until early 2005, when revenues once again took a downward plunge. In mid-2005, the company was notified by NASDAQ that it no longer met NASDAQ's requirements for continued listing, related to maintenance of a minimum amount of shareholder's equity, market value, or net income. In July 2005, Versata was delisted from NASDAQ and publicly traded on the OTC (also known as the Pink Sheets).
Versata, a business unit of ESW Capital In January 2006, Austin-based Trilogy, Inc. acquired the company and took it private. Trilogy then proceeded to merge portions of Trilogy, specifically, Trilogy Technology Group, into Versata and began acquiring further companies, reorganizing dramatically and offshoring most technical positions to its office in Bangalore, India. From 2006 to 2008, Versata continued to make acquisitions mostly in US. Most of the employees in the acquired companies were laid -off with the majority work being offshored to its India office in Bangalore. In early 2009, Versata made another major overhaul of its business model when it asked all its employees in India to work as contractors through oDesk for a gDev which is an entity incorporated by Trilogy to manage its outsourcing activities. The only employees left in Versata were the ones in US.
Acquisitions
a Corizon was acquired by Metatomix, while Metatomix was part of Versata. b Infopia was acquired by Everest Software, while Everest Software was part of Versata. c Symphony Commerce was acquired by Quantum Retail, while Quantum Retail was part of Versata.
Legal disputes
Patent infringement and "poison pill" lawsuits with Selectica The legal disputes with Selectica began in 2004 (before Trilogy acquired Versata in January 2006) and lasted until 2010. While there were many suits and counter-suits, they largely centered around three issues:
2004–2006: Patent infringement in configure, price, and quote (CPQ) software 2005–2007: Patent infringement in contract lifecycle management (CLM) software 2008–2010: The "poison pill" lawsuit In 2004, Selectica and Trilogy had competing CPQ software: Selectica sold Solutions Advisor and Deal Optimization, while Trilogy sold Selling Chain. In April of that year, Trilogy Software sued Selectica for patent infringement. In 2005, before the court ruling, Trilogy made several offers to buy Selectica, but the board rejected them. In January 2006, the court ordered Selectica to pay Trilogy $7.5 million in damages. Four days after the January 2006 judgment in the first lawsuit, Trilogy announced its acquisition of Versata for an undisclosed amount. In 2005, Selectica had acquired the Determine CLM software platform, which included features that overlapped with some offered by Versata. In October 2006, Versata filed a second patent infringement lawsuit. The case was settled in 2007, with Selectica agreeing to pay Trilogy and Versata $10 million, plus up to $7.5 million in additional contingent payments. In 2008, Versata began acquiring Selectica stock. By December, Selectica's board amended its shareholder rights plan to adopt a "poison pill" with an unusually low trigger threshold: if any shareholder acquired more than 4.99% of company stock, their ownership would be diluted. The board explained that the move was meant to protect Selectica's net operating losses (NOLs), which were tax-deductible if the company returned to profitability. Under IRS Section 382, a significant change in stock ownership could cause those NOLs to be disqualified. Versata intentionally triggered the poison pill and also offered to sell back the stocks at a profit (greenmailing them), which prompted a legal dispute over whether Selectica's board had the authority to set such a low threshold and whether defending NOLs justified triggering shareholder dilution. The case ultimately reached the Delaware Supreme Court, which upheld the poison pill in October 2010, ruling in favor of Selectica.
Intellectual property lawsuit over joint development with Sun Microsystems In 1998, Sun Microsystems hired Trilogy to help Sun's developers in California create a software configurator (later named the WC5 Configurator) that Sun's customers could use to modify products they wanted to buy, customizing products to have the features they wanted. Trilogy worked on the WC5 Configurator for several years, then Sun transferred the work to Oracle to finish. Trilogy believed that they owned the copyright to the work they'd done for Sun, and in 2006 after the merger with Versata they sued Sun for more than $100 million in damages. In April 2009, a jury ruled in favor of Sun and rejected Versata's claims.
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