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Morpheus first exit since merger

Morpheus Technology Ventures (Morpheus) has made its first realisation since its formation from the merger of two of Scotland’s leading technology development businesses, ISI Group and The Value Innovators (TVI). The firm has sold its hothoused software business Empace to Glasgow-based McLaren for $11.25 million.

Empace, which provides enabling technologies that extend the functionality of document and web content management systems to engineering design information and other digital content, will be merged into McLaren’s existing software business, kVisia.

McLaren, a leading creator of enterprise content management solutions for global 2000 engineering businesses has acquired Empace in a cash and paper transaction. The deal is being funded by Penta Capital, that recently completed its first transaction when McLaren Consulting effected a demerger from parent company ISI Group and created a new holding company, McLaren plc, in a deal valued at GBP20 million. Debt finance is provided by Bank of Scotland.

The deal with McLaren sees Empace move into the next phase of accelerated growth as a key component of kVisia and as part of a phenomenal global business that is McLaren, said Alex Allan, chief executive officer of Morpheus.

He added: “We took Empace from a concept to a global business with a significant multi-million dollar turnover and 180 customers worldwide in three years, proving our abilities in hothousing high growth technology businesses.”

As a result of the acquisition and the rapid growth of the industry leading software business, two companies have been formed McLaren Technologies and McLaren Global Services. McLaren Technologies will specialise in the continued development and marketing of kVisia enterprise software products (including integrating Empace’s complementary products) both directly and through a global network of authorised solution providers. McLaren global Services will provide service solutions to Global 2000 companies, through McLaren Consulting’s businesses in the UK, US and Europe.

Allan said that Morpheus is now looking to add value to its business portfolio through VC funding. The firm is hoping to raise between GBP2 million and GBP3 million and is currently in talks with Ernst & Young. At present, it has a projected profitable annualised turnover of some $5 million from its services business.

The business has a further four hothoused software businesses that it is developing and expects to announce its first strategic acquisition within the next month.

In turn, Morpheus is now soliciting business plans for software companies that see the advantage in rapidly building out their capabilities in exchange for Morpheus taking an equity stake.