MRCH is officially gutted...
Now selling between 3 and 12 cents.
A fitting end to the arrogant clowns that ran this company into the ground.
But to have the best assets purchased by Flip for pennies on the dollar, true insult to any shareholders that are left.
You all be careful out there
Ray
I thought I'd post this just in case anyone was still watching this thread:
New Chapter Begins for Chicago-Based Internet Consultancy
Apr 04, 2001 (Chicago Tribune - Knight Ridder/Tribune Business News via COMTEX)
-- The dinner between MarchFirst's CEO and Divine's top executives at a popular
Rush Street steakhouse in early March was, by all accounts, cordial.
No one at Gibson's that evening had a clue that Robert Bernard would soon be
history at MarchFirst.
His resignation as CEO on March 12 set the stage for an ongoing MarchFirst fire
sale in which Divine CEO Andrew "Flip" Filipowski bought the remains of
Bernard's original company for a $12.5 million cash down payment.
Bernard says their dinner talk was all about a new Divine software venture. For
their part, Filipowski's team believed that Bernard was hunting investors for
his increasingly cash-strapped Internet consultancy.
Whatever the dinner's purpose, Bernard already was losing control to the
MarchFirst investors who had rescued the company with a cash infusion only three
months earlier. By that point, employees say, Bernard was reduced to the role of
an outsider, forced to ask questions about meetings in which he was no longer
included.
Within weeks, with Bernard gone, Filipowski was negotiating to buy what he calls
the "gems" of MarchFirst, the pared-down remains of the former Whittman-Hart. It
was a company Bernard spent 17 years building into a respected consultancy
valued at $4 billion in late 1999, before the ill-fated merger Bernard
engineered to create MarchFirst.
It remains to be seen whether Filipowski can make a go of the renamed Divine
Whittman-Hart. His own company--a failed incubator turned bottom-fisher--is an
improbable white knight for the new entity's 2,100 employees.
But Divine has cash, about $250 million at the end of December. And cash is king
when capital is scarce.
The deal that unfolded in the past 30 days highlights Filipowski's aggressive
dealmaking, former employees say. It also illustrates how quickly and
unpredictably fortunes can shift when a tech-boom cycle goes bust, destroying
businesses, jobs and wealth.
"A month is like a year in most industries," Bernard said in a telephone
interview Monday. He declined to talk about Divine or MarchFirst, stressing that
he has had no involvement with either since leaving MarchFirst.
As for what comes next, he doesn't rule out starting another company. "I
understand how to build a quality business that stands for something," he said.
The 39-year-old is a younger, smoother, and--according to advisers who work with
both men--more consistently charming businessman than Filipowski, a sometimes
brash, pony-tailed entrepreneur 11 years Bernard's senior. Both men aimed
high--and fell far when the Internet bubble burst.
The pair's business dealings with one another go back at least 16 years, a
history that's thicker than Gibson's famous steaks.
Both are self-made strivers from working-class Chicago neighborhoods who
bootstrapped their way into the high-tech world to build small fortunes and
successful companies: Whittman-Hart, a systems-integrator, and Filipowksi's
Platininum Technology, a software company he sold before founding Divine.
To hear Filipowski tell it, he helped Bernard when he was starting out and
needed cash--an account that Bernard disputes and that irritates him, according
to associates.
This much is fact: Filipowski's former Platinum Venture Partners invested $1.5
million of a $5.5 million equity financing in 1995 that prepared Whittman-Hart
for its successful public offering the next year.
Whittman-Hart's initial investors were rewarded handsomely. Bernard and
MarchFirst, on the other hand, were not as lucky with their investments in
Divine.
MarchFirst invested at least $15 million in Divine and lost at least $14.5
million. Bernard, for his part, lost an estimated 74 percent of $250,000 that he
personally invested in Divine as a former director of Filipowski's company.
Of course, Bernard's Divine loss is a pittance compared with his paper losses at
MarchFirst. The value of Bernard's stock holdings in MarchFirst plummeted by
hundreds of millions of dollars over the past year as the company's stock price
plunged.
Divine's battered stock, meanwhile, got a bit of a lift from Filipowski's
Whittman-Hart deal, rising 3 cents Monday to close at $1.65 per share on the
news.
Filipowski described the deal to employees in a conference call Friday before
hurrying to City Hall to inform Mayor Richard Daley about the deal. At his side
was Divine Whittman-Hart's new president, Edward V. Szofer, Bernard's longtime
right-hand.
Filipowski declined to discuss his 15-minute meeting with Daley, but the
impromptu visit underscores the access that he continues to enjoy to the city's
most powerful politician.
Both he and Bernard had Daley's commitments of tax incentives to build world
headquarters--Filipowski on Goose Island and Bernard on the Near West Side.
Plans for both developments were scrapped after the stock market's downturn.
Divine's winning bid for Whittman-Hart was not Filipowski's first run at
MarchFirst, according to Filipowski's account in his conference call with
employees Friday.
He approached Bernard late last year, but MarchFirst's board instead accepted a
$150 million equity investment from Silicon Valley's Francisco Partners, the
outsiders who ultimately took control of the firm from Bernard.
"We passed when Francisco Partners asked us in early March to look again,"
Filipowski said in his call with employees. "It became quite clear...we should
sit on the sidelines and wait for things to sort themselves out."
Waiting for a situation to become as distressed as possible before striking a
deal is typical of Filipowski's style, former Divine employees say.
Soon after Bernard resigned and MarchFirst's investment banker, Credit Suisse
First Boston, began soliciting bidders, Filipowski initiated serious due
diligence. Divine's lawyers signed the deal in the pre-dawn hours Thursday.
Meanwhile, last week MarchFirst resumed layoffs, winnowing some 1,700 employees
Divine decided not to keep. At one office in Indianopolis, 80 out of 150
employees were called into a room where security officers waited to escort them
from the building.
"I certainly don't want to in any way minimize the trauma or the pain or the
agony everyone has gone through," Filipowski said during last week's conference
call with employees. But "a chapter ends and new chapter begins."
-- Rob Kaiser contributed to this story. |
