Duolog snaps up British design automation firm
25th January 2009
Chip design solutions firm Duolog has become the first Irish high-tech company to get involved in the mergers and acquisitions market this year, with its purchase of British based design automation company Beach Solutions.
The Nova UCD-based firm declined to reveal the consideration paid for the company because of confidentiality clauses in the contract, but chief executive Ray Bulger said that it was a combined cash and equity deal with earn-out provisions built in.
Originally a developer of intellectual property for wireless chip design, Duolog has shifted focus in recent years to become a purveyor of electronic design automation tools for chip designers, and now focuses exclusively on the latter product set.
Bulger said the acquisition had been in the pipeline for a number of months, and that the main motivation for the deal had been that Beach Solutions was a direct competitor with one of its design automation products.
‘‘Their Easi register management tool was in the same market as our Bitwise product,” said Bulger. ‘‘We are going to incorporate some of their features and expertise into Bitwise now, and have already hired two of their engineering staff.
Beach Solutions had been in business since 1998, and had raised over stg£6 million (€6.4 million) in venture capital funding from its investors. The company had also made some serious inroads into the Asian market, which was another key reason Duolog targeted it for acquisition.
‘‘We have begun to focus on the Japanese market, and they had already established a presence there. Japanese business e s tend to be quite conservative, and it can often take between 18 and 24 months to build relationships,” he said, explaining how the deal would hasten Duolog’s entry into the country.
The next step for the company is to appoint a Japanese distributor, a task Bulger hopes to have finalised within weeks. Duolog also has its eye on the South Korean market, and Beach already had a presence there as well. ‘‘They had already made quick inroads with a little company called Samsung, and are hoping to continue with that relationship,” Bulger said.
Beach Solutions had annual revenues of around stg£1 million, and Bulger estimated that the deal would bring Duolog’s projected turnover for 2009 up to near €12million,up from an earlier forecast of €10 million. With Duolog selling a number of products in the design automation market, Bulger hoped that it could sell other products aside from the register management tool into its newly-acquired customer base.
According to Duolog’s most recent accounts, it made a €68,000 loss in the year ending December 31, 2007, and had accumulated losses of €165,000.The firm had shareholders’ funds of €5.1 million.
The company has raised €1.1 million in funding over the past two years, receiving €650,000 from Enterprise Ireland and €475,000 from an existing private investor. Bulger said that this had left the company in a strong position, and that it had no immediate funding requirement.
The Sunday Business Post