Monday 20 May 2019

Meet our modest new millionaires

Few people could have felt as satisfied clearing out their desks in the cold bleak light of early January as former Trintech boss Cyril McGuire. He may be out of the job he held for the last 20 years. But that's because at the end of December, Trintech was sold to American giant Spectrum Equity Investment for $130m (€100m), netting McGuire a cool $27m (€21m) for himself.

It's a handsome payoff but, as McGuire is keen to point out, the result of long years steering the company through many ups and downs.

He also has plenty to keep him busy. The 50-year-old entrepreneur is a new father. His wife gave birth to triplets last October.

McGuire's success has made little impact on the public consciousness as news of further redundancies and company failures continue to dominate the headlines.

But the Trintech deal is far from a one-off. Major American companies with money to invest are circling Ireland at the moment looking to buy hot technology companies. And there are plenty of them.

In many ways it's a tale of two Irelands. There's the floundering domestic economy with its crumbling construction industry, struggling retailers and terrified consumers clinging tight to what money they may still have. Then there are the exporters which include a surprising number of Irish-owned companies with high-tech, world-leading products.

Trintech, for example, was founded by McGuire and his brother John in the 1990s. It now sells financial software to some of the world's biggest names -- 7-Eleven, Google, Intel and Hallmark, to name but a few.

The last few years have been tough, McGuire admits. Staff numbers were cut as the global downturn saw big multinationals rein in their spending. But the recovery elsewhere in the world economy last year has meant that business at Irish-owned exporters has picked up again.

At Trintech, the deal has been an added boon for employees, many of whom have shares in the company. Company president Paul Byrne is making an estimated $4.1m (€3.2m).

"Most of the technology companies are exporting globally and the international markets are very vibrant now. The recovery is well on the way outside of Ireland. Ironically we had one of our best years last year," says McGuire.

Amid all the doom and gloom in the domestic market, it can be surprising to learn just how well Irish high-tech companies are doing overseas.

In the food-processing business, the Dublin-based company Odenberg is a world leader. Some 65pc of the chips eaten worldwide -- or 90pc of the French fries eaten in the US -- come from potatoes peeled using Odenberg technology.

Odenberg is in the process of being sold for €55m to a company called Titech.

Like McGuire, Odenberg's executive chairman Shane Mulhall says that the company's success is the result of many long years of slog. It started in the 1980s as an importing business, buying potato peelers from a Belgian company. But within a few years it realised that it could make better machines.

"We developed a potato peeler that used the very latest technology and we went off to America to sell it to the big food processing companies. But for two years none of them would buy. It took a lot of effort on our part to keep pushing. We knew we had the best machine," says Mulhall.

Now Odenberg counts all the major multinational food processors among its clients. Most of its profits these days come from food-sorting equipment, based on technology it picked up for a song from an inventor.

What these companies have in common, aside from being barely known on their home turf, is that they are hotbeds of innovation. All of the major research and development work at Odenberg takes place at its Citywest premises in Dublin. "All the senior people are Irish. I think we really underestimate the wealth of technology talent that exists in this country," says Mulhall.

It's not gone unnoticed overseas. Or indeed among pockets of investors in Ireland. McGuire for example is involved now in a venture capital company which invests in Irish technology companies.

"I've great faith in Irish technology companies. They're internationally focused from the very start and the opportunities are greater than at any time before," he says.

"When we started up there just weren't that many people around prepared to invest in a tech company. Now there's plenty of money there."

Niall Carroll, who runs one of the big Irish investment companies ACT Venture Capital, says the same thing. His company was one of the investors in Odenberg.

"There's extraordinary talent here," he says. "There's a really exciting new crop of technology entrepreneurs and they're doing really well. Their success has nothing to do with what happens in the domestic. A lot of them are incapable of borrowing from banks anyway because they're seen as too risky so the banking crisis is irrelevant to them."

"These companies either get investors here to back them or they get money from outside of Ireland. And there's plenty of money outside of Ireland prepared to invest in them."

If there's the start of a minor boom in the Irish tech sector it's nothing particularly new, but nor is it reminiscent of the boom in property or banking.

The movers and shakers behind these successes are rarely seen outside of the business pages and are certainly unlikely to grace the social columns.

Cyril McGuire drives a four-year-old BMW and despite his latest windfall has no intentions of changing his car. He owns his own house in Dalkey and admits to having some property investments but steered well clear of the mania that gripped the Irish property market a few years ago.

Mulhall too says he lives a modest lifestyle.

There is discernable scorn in both men's attitudes to the excesses of the property barons and their high-flying life-styles.

"I don't own a helicopter and if I go the races I'm there as an ordinary punter," says McGuire. "If I want to go somewhere I book a ticket on a plane like everyone else."

"The buzz for me is getting involved in new companies and growing them. I've no interest in showing off. I think it's because whatever wealth I've earned has come the hard way, through graft. I wonder if when wealth comes easy -- when it's just a matter of flipping a property -- well it's easy come, easy go. My attitude is that I worked hard for my money and it's going to work just as hard for me," he says.

"I think for a real entrepreneur growing a business is the game," says Mulhall. "Money might be a by-product but it's not the game itself. When you see people paying money for the things they don't need or want, it all becomes nonsensical. The satisfaction, for me, is in the job. You get the impression with some of the property guys that they'd do anything to keep themselves amused. They weren't satisfied with what they were doing."

Of course the Irish tech industry had its own boom-bust cycle back in the early noughties. There was rush in what was known as the dot com boom for tech companies to float on public exchanges such as New York's Nasdaq. The share prices of these companies soared. Ireland had its own stars, among them Trintech but also companies like Iona Technologies and Baltimore.

"There was a time when all the big money in Ireland wanted to get into technology. Everyone was looking for a slice of the action," remembers McGuire.

But the bubble burst in 2001 and the share prices of these companies began to fall. There were accusations that some of so-called hot internet companies were little more than pipe-dreams written on the back of an envelope by caffeine-addled twenty-somethings.

Trintech survived the bubble burst but, as McGuire remembers, big Irish money burnt by the dot com crash went looking elsewhere for a 'safe bet' and, at the time, it was decided that property and then banking were the 'next big thing'.

"Technology was out of favour," says McGuire.

And perhaps that was no bad thing, since it allowed the industry to develop out of the limelight and away from the fast-buck merchants.

"It's all a series of bubbles or cycles," says McGuire. "The trick is to play the long-term gain and if you're intent on growing a business that's what you have to do."

It's not just Irish tech companies that are benefitting from renewed interest in the sector. Maples and Calder is an international law firm that arrived in Ireland in 2006 at the very height of the boom. But it's managed to grow to 160 people since and has been involved in a lot of the major deal-making last year.

It advised Spectrum on the purchase of Trintech, explains partner Edward Miller.

"We're definitely going to see a lot more of these deals," he says. "Tech companies here have come out of a very difficult period and those that are internationally focused and have products people want are of huge interest to investors."

"Clearly we're in a buyer's market, there's no doubt about that. People are looking for value and there's definitely a view there's value here."

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