Assima Buys IMS Learning

Selling your “baby” is always done with mixed emotions, but in this case, I am excited to finally reveal that the British company Assima Ltd. has purchased IMS Learning A/S as of 1/1/07, the company I co-founded in Copenhagen in 1994 and ran on a daily basis until 2000.  I wanted to mention a few lessons learned along my journey with IMS.

But first, I want give credit to our co-founder and current Managing Director, Søren Sander, and our other Director and Partner, Peter Aarø-Hansen, for making sure the company performed well commercially – which ultimately made it attractive as an acquisition.  I also credit our long-time Chairman and original angel investor, Søren Fogtdal, who has supported us since the beginning.  Sander and Peter will continue with the company, which will benefit both them, our Danish clients, and Assima.  Assima is lucky to have them in the fold.

  • Joining a bigger company offers personal growth opportunities for the entrepreneur and senior staff.  New responsibilities, new blood, new ideas, a larger playing field, cross-pollination, synergy, whatever you want to call it.  Rather than confining their attention to Denmark or Scandinavia, my colleagues who remain at IMS now have an international company with global ambitions and resources.  It can be tough for a small regional company to offer greater challenges to its key people.  I don’t think this is a problem for most American companies, but it is pretty typical for Danish companies (whose national market is just 5.5 million people). 
  • Small, private companies have poor liquidity for the investors – they can easily fall into a “lifestyle company” model.  By this, I mean the company is successful enough for the top executives to earn great salaries and benefits, but not profitable enough to throw off cash to the investors nor large enough to be an attractive acquisition candidate.  As an entrepreneur, it is attractive and low risk to remain at a comfortable revenue level indefinitely.  Angel investors grapple with this challenge in almost every small company they invest in.  Once invested, angel money is locked up.  Of course, once the VC’s invest, there is much more pressure to push for growth and an exit.  VC’s get at least some power to force development and changes, which guard against this stagnation.  So, first lesson is, if you’ll want liquidity (and you do), make sure such expectations and provisions supporting that are included at the beginning.
  • As an entrepreneur, selling your company frees you to do new things.  In 2005, I decided to reduce my involvement and become a relatively passive investor in IMS.  But I found that the company in which I’d spent thousands of hours, years of effort and poured in my heart and soul, still took mind share and conscious effort to track.  My business focus is on the USA now, and I am glad to not have to worry about the guys back in Denmark – and to realize some investment which I believe I can put to better use locally.
  • Working with overseas partners is hard, under the best conditions.  When I was on the Board of IMS, we had directors in Monaco, Copenhagen and Los Angeles.  Although we had all known each other for many years, the lack of direct, personal contact made running the business challenging.  Communication was always hard to arrange.  I draw an analogy to the current trend of outsourcing programming to India or Russia:  I have learned that I’d rather have 1-2 expensive, sharp programmers sitting next to me, than a large team of cheaper programmers I can only connect to via e-mail – who might not really understand what I say nor have the connection to customers to really understand the issues.  Don’t underestimate the need for local proximity.
  • Finally, good friends are hard to find.  I’m not talking about the friends you made in college.  I mean the business colleagues you work with who become your “professional” friends.  People you can trust to put the interests of the company above their pure selfish interests.  People who don’t cheat the company nor stab you in the back.  People who believe in the mission of the company (but not blindly), who sincerely support one another, and who work to contribute more than they take out.  I have been amazed since returning to the USA how rare such qualities are; I was lucky to find these people in a strange land.  My colleagues at IMS have been the best people I could have worked with, and I congratulate them on starting the next chapter of the company.

Disclosure:  I was a significant shareholder of IMS Learning A/S, and now I’m a relatively insignificant shareholder of Assima.

Invest in Denmark announcement March 7, 2007 (in English):

ComputerWorld March 6, 2007 on the Assima-IMS Learning purchase (in Danish):

IMS Learning’s own announcement (in Danish):

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