Hitting the Hy Road

The $265 million acquisition of Westlake's Hyland Software in July will provide the software maker with the capital it needs to grow, but at least one industry analyst expects Hyland will eventually be sold to a larger company or be taken public by its new owner — buyout firm Thoma Cressey Bravo.

"In general, private equity firms don't make investments like this unless they see an upside like that in the future," says David Yockelson, vice president, research operations of the 451 Group, a New York City-based technology analyst firm. "I don't think it's something they're looking for tomorrow. It's definitely something they want to grow."

Hyland, which had considered going public several years ago, pulled its IPO plans in 2004 due to poor market conditions.

Since then, it has continued to expand with its OnBase enterprise content-management software, particularly making strides in the health care, banking and government sectors.

But not all of its growth has been organic. In 2006, Hyland acquired Michigan-based Matrix Imaging to expand its offerings in the higher-education market. With the Thoma Cressey investment, expect more acquisitions like that in the future, Yockelson says. "This will certainly give [Hyland] more leverage in looking around at what's out there," he says. "A deal like this gives them a lot of independence."

A call to Hyland Software CEO A.J. Hyland was not returned, but in a letter posted on the software firm's Web site, Hyland wrote, his "goal is to grow our leadership position in the enterprise content-management market. [Thoma Cressey] brings the level of financial expertise and ability to leverage sophisticated sources of capital necessary."

Although a sale may loom in the future, don't look for the Hyland family (A.J.'s father, Packy Sr., was a co-founder, and brother, Chris, is the CFO and chairman) to be packing their offices in the near future.

"The Hyland family is very entrenched here, so I don't think there's any indication that they're going anyplace," says Dorothy Baunach, CEO of economic-development organization NorTech. "Anytime you get financing that big from outside the region, it's good."