San Francisco-area firm acquires Menomonee Falls-based Websight Solutions
In a strategic move to expand its business operations to the Midwest, Wirestone, a Web development and services firm based in Emeryville, Calif. has purchased Menomonee Falls-based Websight Solutions, a digital professional services firm.
Former Websight Solutions CEO and president, Tom Snyder, will serve as vice president and will continue to lead the 12-person Milwaukee team.
"We were drawn to Websight Solutions due to the exceptional leadership of Tom Snyder, who has taken his company from a basement start-up to one of the leading digital professional services companies in Milwaukee," said Chris Running, president and CEO of Wirestone (www.wirestone.com). "In expanding to the Midwest, we are extremely pleased to bring to Wirestone the exceptional quality of work and client relationships developed by Tom’s team."
According to Snyder, the corporate cultures and values were a perfect fit. "We share the same core values, the same heart for customer service, the same values like integrity and character," said Snyder. "And we just felt that it was going to be a good move."
Snyder, who began his Web development business in the basement of his home in 1996, recently citing revenues of nearly $1 million, said the decision to be acquired was made because it was an appealing and attractive option that occurred at just the right time.
"What’s happened is there are sections of the marketplace here that still have that impression – that we’re just a guy working in his basement, not a staff of 13 people in a 2,500-square-foot office building. We were thinking last summer of what we would need to do to be able to change that impression in the marketplace. … And while we were thinking about all of those options, that’s when Wirestone approached us."
As Wirestone’s Milwaukee office, the firm will focus on delivering Web-based solutions for its clients, including Web strategy, application development, interactive design and hosting. It specializes in front-end development and custom applications for the back-end.
All Websight Solutions employees will remain with Wirestone and serve in similar positions. The acquisition will also bring greater benefits to those employees, including stock options, increased growth potential, expanded project opportunities, and the chance to provide services to a greater geographical reach, according to information provided by Wirestone.
"With Wirestone coming in it gives us more resources, it gives us a better benefit package," said Snyder. "It also gives the staff at a team level, the pride of being a part of something big and growing – everybody is just really excited about the potential that this offers for everyone."
The acquisition is the fourth since Wirestone’s formation in April 2000. Wirestone now has 11 regional offices throughout the United States. According to Running, the acquisition is part of Wirestone’s plan to acquire best-in-field Web development, marketing, strategy and design firms in major cities throughout the United States. Wirestone was also to announce an acquisition in Chicago on Feb. 6.
"The whole Wirestone philosophy is to find a profitable existing company with a cool corporate culture and allow, what in essence was originally an entrepreneur that is now a manager, to still be able to exercise his entrepreneurial spirit," said Snyder, "to continue to maintain and foster the corporate culture that existed before the merger."
Concentrating its current acquisition strategy in the Midwestern and Western United States in early 2001, plans to expand to the East Coast will come in the second half of 2001. International expansion will also launch in 2001.
"What this move will allow us to do is to be able to take on a [large company] and have the backup resources of our other offices to be able to go and continue to pursue those kinds of clients," said Snyder. "It allows us to move up to the next tier of business in the Milwaukee area."
With the acquisitions, Wirestone now has more than 170 employees. Additional jobs are likely to be added in Milwaukee, and other Wirestone offices, as the company grows its client base regionally, the company said.
"Let’s just say that we have plans to expand the size of the Milwaukee office – whether we do that through acquisition or through organic growth still remains to be seen," said Snyder.
Wirestone is projecting revenues of $20 million for 2000 and $50 million in 2001, which places the company among the top 20 interactive companies in the country as ranked by Adweek.
A local merger-and-acquisition advisor sees the move as part of a trend whereby firms realize growth through acquisition.
"It’s tending to be a buyer’s market where the strategic buyers are looking to grow, and I think that’s going to be a continuous trend for the next year or two," said Christopher Zuzick, a principal with Vrakas-Blum, a CPA and business advisory firm in Brookfield.
High-tech is currently a tough market to provide a decent return for the sellers, Zuzick also notes. "There’s got to be an element of caution in any sale in regards to what type of money they’re going to get from the proceeds of the sale," he said.
Regardless of the industry, Zuzick believes that in the Midwest, 50% of the companies between 10 and 50 million dollars are going to go into transition. "So the questions is, whom are they going to transition to," he notes. "Are they going to transition to a consolidator like this company, or another buyer, or maybe to the bank? It depends on the strength of the company."
According to Giga Information, the brightest e-business future for mid-sized companies lies in their ability to become key players in a larger niche market. Giga also notes that mid-cap companies need to plan for rapid commerce adoption by finding their niche markets and building their infrastructure and brand recognition accordingly.
Websight Solutions client Frank Mayer & Associates Inc. of Milwaukee, said he is encouraged by the move. "We have always appreciated Websight Solutions’ willingness and flexibility to meet a variety of Web-related needs for Frank Mayer & Associates, including those of our national client base," said David Zoerb, senior vice president at Frank Mayer & Associates. "We look forward to watching their services and flexibility grow as Websight Solutions expands its resource base through this merger."
Other Websight Solutions clients include Fred. W. Usinger, Inc., Mitchell International Airport, and Panasonic.
Terms of the acquisition were not disclosed. Wirestone said it received its first round funding from leading venture funds Prime Ventures, Edgewater Ventures and Plantagenet Capital.
