Teradata selling Aprimo unit at $435M discount

Dayton, Ohio-based Teradata Corp., which acquired Indianapolis-based Aprimo Inc. in 2010 for $525 million, said it agreed to sell that business unit to a private equity firm for $90 million.

Aprimo, one of the area's fastest-growing startups during the 2000s, made up the core of Teradata's Marketing Applications unit. Teradata said Monday in a securities filing that it would sell the unit to TMA Solutions LP, an affiliate of Los Angeles-based investment firm Marlin Equity Partners. The deal is expected to close this quarter.

Teradata, a publicly traded data-warehousing company, announced in November that it planned to sell its Marketing Applications business "to exclusively focus our investments and attention on our core Data and Analytics business." The company said it negotiated with multiple prospective buyers before taking TMA's offer.

"This transaction sets up Teradata Marketing Applications for a better future, and creates the opportunity to continue the business’s position as a leader in the marketing cloud applications category," a Teradata spokesman said Tuesday in an email.

The business unit's main offices are in Indianapolis, London, Munich and Raleigh, North Carolina. Teradata said about 160 of the unit's 1,000 employees work in Indianapolis. The division's largest office is in Germany.

Aprimo employed about 400 people in Indianapolis when it was acquired in December 2010.

It's not clear whether the unit will assume a new name. A Teradata spokesman said Marlin Equity Partners will name a CEO and a chief financial officer for the acquired business at a later date. Teradata executive Bob Fair, who has led the unit for the past year, will relinquish that role when the deal closes and remain with Teradata as chief operating officer, the spokesman said.

Co-founded in 1998 by local technology veteran Bill Godfrey, Aprimo was one of the city's brightest tech startups during the 2000s. It raked in $69 million in revenue in 2007, and got scooped up by Teradata three years later amid a wave of marketing software acquisitions across the country.

The buyout pumped millions of dollars in exit capital into central Indiana's economy, some of which Godfrey and other former Aprimo executives have injected into new startups. Aprimo alumni now work at locally based companies that include Angie's List, Perq and High Alpha.

The 2010 acquisition seemed at the time like a win for both the buyers and sellers, but it never panned out for Teradata. Former employees and industry observers said Teradata appears to have been poorly suited for handling marketing-software assets and struggled to capitalize on its purchase, even after investing in it.

Tim Kopp, a local venture capitalist who was formerly ExactTarget's chief marketing officer, said Aprimo built a leading product in the marketing automation and management sector. Established companies, including Teradata, saw the growing importance of being able to serve enterprise marketers and embarked on a series of acquisitions, he said, but it's not as easy as "plug and play."

"My sense is that Teradata had a very different culture than Aprimo," Kopp said. "And [Teradata] was also selling to a different kind of buyer—an older-school, legacy IT buyer versus a modern-day CMO."

"Selling to a marketer is very, very different than selling to anybody else," Kopp said, "and I think the organizations that get that are winning. But it's a tough transition to make."

Kopp said the discount—from $525 million to $90 million—suggests the business unit deteriorated over time. "But it also means there's still value in what's left," he said, noting that acquisitions that don't work out tend to disintegrate.

He said if he were in the shoes of the officials leading the soon-to-be spinoff, he would aim to anchor it in Indianapolis and infuse strong talent into it to sort out some of its operational challenges.

"I mean, Aprimo built a really great business, and they did it here," he said. "Why wouldn't you want to go back to doing that?"