After ConvergEx, Eze Eyes Integrated Technology Approach

"One of the things we started on, earlier in 2012 before this process even began, was a phased-in restructuring of the ConvergEx umbrella to create a software platforms group," says Tom Gavin, CEO at Eze Castle Software, who will also serve as CEO of the new Eze Software Group. "The idea was that, under me, we'd take the Eze business which I was already running, we'd move the RealTick business to underneath me as well, we'd take the Cogent commission management software piece and move it into the group. We'd be building out a more logically-organized software platforms division of ConvergEx, in recognition of the fact we needed to more efficiently execute on the long-term strategy of what we called flexible front-to-back."

Value-Add
This strategy identifies the points along the financial technology value chain, where linkages between products can be exploited and engaged to optimize Eze Software Group's existing products. RealTick itself is a successful execution management system (EMS), for instance, and Eze has its Buy-Side Technology Award-winning order management system (OMS), providing areas where the two can overlap without duplication of effort. For the client side, Gavin says, this produces benefits as well, particularly as the technology landscape is no longer one where having a single box ticked is adequate.

"Right out of the gate, we'll have the EMS box, the core OMS box, and the portfolio management box occupied with a house brand," he explains. "What this allows you to do is remove some of the fronts in the war, from a development standpoint, for each of those products. Rather than the EMS having to think longer-term about building out a compliance engine, for instance, the OMS group already has one."

Given the reorganization that was going on under ConvergEx, the operational aspects of changing from a group company to an independent entity should be fairly simple. The current CEOs of the respective businesses will move under Gavin, while existing personnel and infrastructure will be (relatively) easy to cross over.

"The simplicity of this from a carve-out perspective─bearing in mind every deal like this is complicated overall─is that, again, under the ConvergEx umbrella, we'd already begun the process of reorganizing internally into this management structure," he explains. "It's literally just taking what we had, which was a software platforms group under ConvergEx that I was going to be running, that entire structure, and going ‘click' to transplant it to independent status."

What this allows you to do is remove some of the fronts in the war, from a development standpoint, for each of those products. Rather than the EMS having to think longer-term about building out a compliance engine, for instance, the OMS group already has one.

Completion and Acquisition
Following what he describes as a "very busy first-round season", with a large degree of reported interest in the sale from potential investors, Gavin confirms that TPG's investment is intended to be a long-term one.

"To be honest, that's one of the things we liked about TPG as a partner. From the get-go during this process they made it very clear that they're long-term investors, that they're backers of a management team, not just a product story," he says.

When the deal completes─around the end of Q1 and into Q2, according to official statements from ConvergEx Group─Eze Software Group will complete the acquisition of portfolio management vendor Tradar, as well. Here, too, Gavin sees benefits not just in terms of the ‘flexible front-to-back' strategy mentioned before, but more simply, in terms of reach.

"Just the geographical complement is great," he says. "Eze and RealTick are very strong in the US, with a long-standing and good, growing story in Asia. But they're not as long-standing or large in terms of count as Tradar is in Europe, so it's a good mix we're bringing together."

The Bottom Line

• Eze Software Group will be identifying and utilizing compatible technology points among its products, marketing them individually and as parts of an integrated package.
• The company will retain links with ConvergEx, as both will have a mutualized marketing arrangement as two separate entities.
• The acquisition of Trader gives the firm capabilities in portfolio management, as well as the OEMS space.