Breakaway CEO Gordon Brooks said he fielded calls from about five interested companies a week until he stumbled upon the opportunity with Eggrock, an electronic business technology firm. The $250 million deal sent Breakaway?s stock up $4.63 or 6.6 percent to $74 today.
To Brooks, a marriage with Eggrock made sense. Eggrock's CEO Maureen Ellenberger formerly worked with Brooks for four years at Cambridge Technology Partners. Today both run services companies focused on providing mid-sized businesses strategy consulting, systems integration and application hosting.
Ellenberger said she was planning to take the Concord, Mass.-based company public this year and was meeting with bankers when the deal with Breakaway deal was struck. Breakaway went public in October.
"This wouldn't have happened if it wasn't Eggrock," Brooks said in an interview today. "They have the same culture, the same methodology They could have gone it alone (but) putting us together really makes us unstoppable in this market."
"(Our) business model and client focus is almost identical to Breakaway," Ellenberger said.
Forrester Research analyst Julie Meringer agrees: "This is big news for the middle market."
Meringer said Breakaway is now one of the bigger companies targeting mid-sized companies seeking affordable services to help get their businesses online. Mid-sized firms typically have revenues of $1 billion or less.
Though services giants such as IBM Global Services and KPMG have also been eyeing the mid-market for new customers, Breakaway is tapping the mid-market exclusively.
Under today's deal, Breakaway will issue 3.636 million shares of common stock to privately held Eggrock's shareholders, who will own 12.6 percent of the combined company.
Eggrock has 160 employees and the combined companies will have a staff of more than 500 people located across the United States.
This week, Boston-based Breakaway is opening an office in London to establish a European presence, one year ahead of schedule, Brooks said. Meanwhile, Eggrock plans to move its offices to a space previously occupied by Digital Equipment in Maynard, Mass.
Forrester Research has predicted that growing businesses will account for 53 percent of the overall spending on e-commerce services in the year 2000, growing from just 15 percent two years ago.