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Soliton for Sale in Early Sign Of Consolidation Of the Reference Data Management Industry

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Reference and time-series data management provider Soliton is looking for investment from a strategic partner, or a potential outright sale of the company. Early signals, at the time of Reference Data Review’s press time, suggest the vendor has appointed an investment banker – Kirchner & Co. – to proactively contact potential suitors.

The Canadian-based company was believed to have been in very serious discussions with another, significantly larger software company through the first half of this year about a possible acquisition. These negotiations are now understood to have fallen apart, prompting Soliton to cast its net wider. Soliton confirms that it is seeking investment and the company says, “Soliton and its TimeSquare product has continued to grow and is becoming readily accepted in the financial services marketplace. In order to satisfy increasing demand and continue to provide quality service to our current customers, we have decided to pursue and are actively looking for a strategic partner. This partnership could come in many forms but it could also result in the sale of the company.”

The move signals early consolidation in the burgeoning business of supplying reference data and data management technologies. The field of suppliers has been growing dramatically over the past few years as the recognition of the importance of reference data, and therefore the sales opportunity, has increased. Many industry observers have suggested that it is now time for consolidation of smaller players to occur in order to progress the market’s offerings.

Soliton’s revenues, estimated to be around $5 million, come primarily through its original business of offering high-performance platforms that support data manipulating applications for functions such as financial consolidations, time-series data, complex mathematical calculations and modelling. In more recent years, Soliton has reshaped itself as a reference data sourcing and integration platform through the flagship TimeSquare product.

The company has also previously received investment injections, although the value of these investments is unknown. Sources suggest that the changes within the company and some recent deals on the data management front over the past year have resulted in profitabi-lity from the reference data business.

While it has managed to secure some good deals, the fact remains that Soliton is not a large company – a tough position to be in when dealing with Tier 1 and Tier 2 financial institutions that look for low-risk, scale and longevity from their data management suppliers. It would therefore appear to be a good move for Soliton to engage with a strategic partner that can provide those qualities in addition to its own data sourcing capabilities in order to secure future growth.

As for potential suitors, there have been rumours circulating that the original interested party was SunGard. No surprise for many, given SunGard’s stated aim of building its Data Management Solutions offerings through acquisitions and it’s ongoing discussions with several players in this space. Both Soliton and SunGard decline to comment.

It is not clear why the negotiations with SunGard may have fallen apart, although company valuations can be a sticking point. One source also suggested that there was concern about its use of a proprietary APL programming language and the reliance upon a small number of technology specialists to operate it.

Other suitors could be any number of data management systems providers, as it could ease their own datafeed handling and integration headaches – Soliton’s speciality.
Soliton has been in operation for over 10 years. Some of its management and software engineers worked together at I.P. Sharp Associates – for those historians among us, you may remember that I.P Sharp was a data warehouse and networking solutions provider bought by Reuters in the late 1980’s.

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