Apparently, Wednesday is the day to be acquired. Today, the announcement that Broech Corporation (which does business as TUSC) was acquired by Mumbai, India-based Rolta for US$45 million. TUSC will become a wholly-owned subsidiary of Rolta and Joe, Rich, and Brad will continue to lead “TUSC – A Rolta Company”, at least for now.
I definitely think that most people could not have foreseen TUSC being acquired, especially by an Indian firm, but it looks like Acquisition Wednesday is just full of surprises! I know things must have changed since I worked there as I certainly could never have imagined this event coming to pass. I’m unable to predict how TUSC (or any 17+-year-old private firm) will fare as part of a public company. Challenging times and big changes are in store I suspect.
For now, you can read the press releases here and here.
This seems to somewhat validate an article that was tweeted yesterday by Puneet Thapliyal. It was a posting that discussed the challenges that Indian firms are experiencing now with higher wages and many other factors. Thanks for sending it along, Puneet!
I’d love to hear your thoughts on the acquisition in comments below.
I got this earlier today from a friend that still works there, and its pretty freaky. I mean, I can see TUSC acquiring other firms, not the other way around.
So wait, does this mean that the options I was granted while I worked there are worth something now? 🙂
Yeah, me too. Other “ex-Experts” (the nickname that was created to describe all of us ex’s) have mentioned the same thing about their past options this morning. Hopefully, someone can find a copy and read it to see if they’re worth anything now!
I don’t get it. Why did they sell out for just the revenue? I mean, the company expects growth right? So, they should at least be worth twice that.
Also, interesting that after years of “The American Way”, they sell to an Indian firm.
Hi Bill,
I agree–others have commented similarly (to me via other channels) about the value. One must conclude that maybe they shrunk? I suppose we’ll all have to tune in for the first full quarter’s financial report. Now that they’re public, I expect that much more will be known about their *real* finances. Private companies can say almost anything with little evidence to back it up.
The real question is what does it do to those previously thought to be worthless options current and ex-Experts are holding?
Keep in mind that 48M is not just consulting revenue. TUSC is a active Oracle software reseller which inflates revenue but carries little buyout value. In the current market 1x or 1.2x revenue is probably a reasonable number. So if they did 5-7M in software sales the 45M seems like an ok number.
As an ex, I was told that my options were escalated to be 100% vested and the company opted to buy them out. Worth checking out…
One argument that was made to try and keep me was that they were ‘protecting me’ from just such a fate as this. Of course, I was also told that the turnover was the lowest in the industry, but 4 of the 6 staff in the office where I worked have left in the past 4 months. Three of those left just to escape a supervisor whose flaws management refused to address. To be fair, the staff are talented and hard working. The owners ARE generous. But I digress…
As for the revenue, the vast majority comes from consulting, followed by remote services and then other bits and pieces, of which software represents a small piece. I’ve been discussing with other ‘ex’es and we think it was a fire sale, based on the revenue goals for last year. I can’t understand it either.
If you are not an employee then your options should not be worth anything. You left that behind when you left the company.
Well, I haven’t found my docs yet, but from what others have told me, they don’t see it that way. A few pioneers have already made the request to exchange their options, but have not yet heard back on the status. I’m sure we’ll see more comments here as definitive answers are obtained.
Curious about the press release statement regarding the “TUSC owns excellence centres and offices across the US. ….” TUSC only has an office in Chicago and Denver. They don’t have an office in Atlanta, Detroit, Dallas etc, as their web sites suggests. Wonder if the Rolta people will be confused to find no “experts” at offices that don’t exist… Rolta bought a Chicago company. TUSC at one time had an office in Atlanta and Detroit etc, but not so for at least 5-6 years now. Go visit their Atlanta and Detroit office. Bet you won’t find anyone, let alone a office door to knock on.
If the optoins are vested, then they are vested so it doesn’t matter if you leave the company. The options that were not vested at the time of depature are no longer available to you.
When were the options given to you?
What is the duration of time the options are valid? (Expiration)
How long does it take for your options to be vested? If they gave you 10,000 per year, maybe 25% of those are vested after the first year. Another 25% after the second year etc. So you’d stay for 4 years before you had 100% of the 10,000 shares. However the next year they gave you another 10,000, of which 25% vested after one year and on and on it goes. So you have to figure out how many options you have that are actually vested at the time you left the company.
How many total options are there? Take 45,000,000 and divide it by the total number of share should provide a value per share.
To sum it up, depending on when you received your shares. Even if they’re vested, they may have expired. Best thing to do is to find your contracts and wait for a letter to come in the mail explaining what they say you own and what you can do with them. Odds are that you’ll have the ability to roll the TUSC options into the India company’s public options or cash out.
@td I had heard that their other offices were “virtual”, but hadn’t gotten confirmation.
@Anon I absolutely would not wait for any letters from TUSC as I simply don’t think that non-employees will ever get a letter. I heard that the purchase price was $1.02 per share. So, you’d have to see what your option strike price was to compute the possible payout. If your strike price was $1.00 and you had 10,000 shares, then you’d stand to cash in $200. Of course, I didn’t find my paperwork yet, so I can’t comment on whether I agree with your opening statement or not.
Dan,
I’ve been through a couple of similar buyouts as an employee. Seems to me that the letter / vested options are a legal issue as a shareholder so whether a person is currently employed shouldn’t matter. Guess it is something to have an attorney review.
Geez, am I the only person who kept those option agreements?
The options (which I think were last granted in 2004) vested 1/4 each year. Further, options expire on the 10th anniversary of the grant date. Options would also become exercisable if the company IPOd and would become half-vested immediately if there was a change of ownership.
So here’s how I read it. Because they waited until after January 1 all of the options granted would be exercisable.
Play the numbers. At $1.02 per share you’d be making money off of every share. Since this is a change of control, you have to tender the shares to the company.
I still don’t see anything in this about giving up exercise rights.
I left the company two months ago. The money was deposited in my account yesterday. I won’t be buying a vacation home, but a new laptop is a possibility 🙂
As for the sale price…
The owners saw the company through the last downturn around 2000. Since many market analysts are using the ‘R’ (recession) word as if it’s inevitable they may have decided it was worth selling for somewhat less than they may have ultimatley been able to fight for just to avoid another such period of stress. Just a thought…
Has anyone else received such a payment? Was there any documentation along with it?
I haven’t heard of anyone else receiving anything. Someone told me that TUSC believes that options are valid for 90 days past the termination date, but I haven’t heard anything official to back that up yet. And I still haven’t looked for my documents at home (on the road this week again).
I haven’t heard of one single ex-employee getting a penny just yet. I still have all relevant paperwork. The wording is confusing, like other docs I ever got from them. I think I will have more solid answers after the February poker game.
Hi, Dan. I was surprised when I stumbled across this article today. I was one of the folks that fled the Denver office because of the management there. I never thought that TUSC would sell out like this. Maybe others are right, they just got tired after the downturn. It's still a shock to me because I have a lot of respect for Rich & Joe.
Welcome to old news! Thanks for stopping by. As you can tell, we were
all a little surprised too. Sounds like things are going well for them
so far, though.
Really worthful article! Hope everything will be ok within some time..
thanks for sharing.. regards
SBL GEOMATICS
Barbarians at the gate ?