By Shera Dalin
Despite the stress, the chase for money and the challenges of
starting a second company, several serial information-technology
entrepreneurs say they’d do it again.
In 1990, Paul Galeski started Magnum Technologies, a
factory automation software firm, with $6,000, two employees
and a small office in Belleville, Ill. Like a lot of entrepreneurs,
he poured his heart and soul into the company.
It expanded quickly, making the Inc. 500 list of fastest growing
U.S. companies. Then, in 1997, it caught the eye of General
Electric Co.
GE offered to buy Magnum and wanted Galeski to stay on to help
run it. Making the decision to sell was “brutal,” Galeski recalls.
“You raise this thing from a pup and grow it into a pretty substantial
business,” he says from his office at Maverick Technologies
in Columbia, Ill.
“The decision to sell was tough. I got physically sick over
it.”
But sell, he did. It was a decision Galeski says he doesn’t
regret because it was the right thing to do for his employees,
customers, himself and the growth of Magnum.
A year later, Galeski left GE, having learned a great deal,
but not happy with the corporate life. An entrepreneur at heart,
Galeski loved the thrill and risk of launching and growing his
own company. He pledged to buy back Magnum or run it out of
existence.
It took six years, but Galeski repurchased Magnum, along with
the five other similar companies that GE had amassed in the
interim, for an undisclosed sum in 2005.
“I could ride back in on my white horse and show General Electric
Company how to do it,” he jokes. ‘The hard part was structuring
the deal. It was almost like separating Siamese twins. We had
13 lawyers involved. It was challenging, but it went very well.”
Once the deal closed, Galeski had some rebuilding to do. Magnum
hadn’t fared well under GE because it was a tiny division in
a behemoth corporation, and not a part of the company’s main
business.
“It was more of a nuisance for them— a rounding error,” he says.
Now, Maverick has $100 million in annual revenue, employs 650
people and has 21 locations, including its first office in Europe.
The company is building bigger headquarters in Columbia that
will open in December. And it was just awarded the largest single
refinery automation project in Chevron Corp.’s history, Galeski
says. Maverick, in partnership with Yokogawa Electric Corp.
of Tokyo, will be modernizing the process automation and control
infrastructure for Chevron Corp.’s eight wholly owned refineries
worldwide.
Along the way, Galeski had to ensure that the former GE employees
adapted to Maverick’s entrepreneurial culture. He also had to
manage investors’ expectations of what he could do this time
around.
“It’s much harder the second time,” he says. “When you have
one success, people really do expect you to do the same thing
again. So be careful what you wish for.”
His advice for entrepreneurs thinking of selling a company and
starting another: “Take a step back and look at it not just
from a business point, but from a personal point. I call it
selling your soul. Spend as much time focusing on the afterlife
after closing as the deal. As long as you keep that long-term
view in mind, you’ll be able to manage expectations.”
Weaving a web of companies
Kevin Haar, president and chief executive of Appistry
Inc., promised his wife he wouldn’t start another company. And
he has much to juggle to expand the computer-software linkage
firm.
“I spend mornings, afternoons, evenings, weekends thinking about
Appistry. I don’t spend much time thinking about what I would
do next,” Haar says.
That wasn’t the case when, after he spent 17 years at Rational
Software, the $800 million company sold to IBM for $2.1 billion
in 2003. Haar was one of the key managers who helped build the
software company and owned a large block of its shares. After
taking about a year off to regroup, Haar decided he was ready
for a new venture.
“I’m not an IBM type of person,” he says. “The things I get
thrilled about—finding that first customer, building a team
and business, creating a culture—those things are an excitement
for me that you can’t have at a big company.”
He joined Appistry in 2004 and has been building it since. The
Creve Coeur company has 30 employees and recently spun off another
company, Clearent LLC.
Clearent is creating software that updates Web-based credit
card transaction processing. The system will run on Appistry’s
low-cost computing structure, making the two companies compatible.
Haar sits on Clearent’s board and Appistry is a shareholder
in the two-year-old firm. While the idea for Clearent came from
within Appistry, the spinoff made more sense than creating a
new division within Appistry, Haar says.
“When you are small, you have to stay focused. You want your
name to represent something specific,” he says.
As Appistry grows, Haar believes there will be many other expansion
opportunities, either as spinoffs or as new divisions.
“There’s a tremendous amount of opportunity in financial services,
insurance and healthcare,” he says. “There will be plenty of
things for Appistry to do for a long time.”
Starting up again and again
Greg Sullivan is what some call a “multipreneur.” He
founded G.A. Sullivan, an information technology consulting
firm, because he couldn’t find a job after graduating from college
with an engineering degree. He started the company in 1981 in
his apartment in Dogtown.
While he was growing G.A. Sullivan, he launched a banking software
company, Hamilton and Sullivan, with partner Rick Hamilton.
He sold his interest to Hamilton seven years later.
Then in 2003, a joint venture of Microsoft Corp. and Accenture
Ltd. called Avanade Inc. made an enticing offer to buy G.A.
Sullivan. Sullivan bit and sold the company for an undisclosed
sum.
“I didn’t just decide one day to sell it. We were always responsive
to inquiries to sell,” Sullivan says. “It worked out well for
everyone and created a lot of opportunities for everyone.”
Restless and ready for the next challenge, Sullivan was recruited
in 2005 as the chief executive of Global Velocity, a next-generation
network security firm in Clayton. He helped the company graduate
from the Technology Entrepreneur Center incubator and recently
brought in $4 million in venture capital.
Sullivan says he thrives on building companies, rather than
operating a mature firm.
“The growth is the fun part, because it’s very challenging.
It’s very motivating to have someone tell you you can’t do it,”
he says. “You are out there competing in the open market and
somebody is out there trying to outdo you. When you get a win,
that’s great.”
He advises business owners who want to eventually sell their
companies to pay attention to market trends and position the
firm to be ready. Make sure the company’s records are current,
its ethics are sterling, and its audits are annual.
“Every maturing industry goes through a consolidation and you
have to decide if you want to be in the first wave, or the second,
or wait it out,” Sullivan says. “Run your business every day
as if it’s for sale.”
