EYak buys Brooktrout Software

(Telephony) Figuring that it's sometimes faster and easier to acquire than develop, eYak this week bought Brooktrout Software, a wholly owned subsidiary of Brooktrout Inc., for $20 million in cash and stock.

It was a bargain, said David Friend, eYak's co-founder who will be chairman/CEO of the combined company.

"Brooktrout decided they wanted to sell the software subsidiary, because they haven't been doing so great themselves in the marketplace and Wall Street said they should get back to basics and focus on being a hardware company," said Friend.

The original asking price--$80 million to $90 million--was too rich for eYak, then "the bottom fell out of the telecom market," said Friend. "I guess I showed up at the right time."

Friend said eYak will incorporate the Brooktrout software into its SoftTelephony platform that uses off-the-shelf Pentiums to do traditional signal processing for applications like DTMF generation, Web collaboration, speech recognition, mixing and sound recording for multipoint audio conferences, playback and storage.

"They bring us speed in development, and they bring us a revenue base that's actually a pretty significant revenue stream," said Friend. "And they bring us some gold-plated customers."

Mark Flanagan, former president/CEO of Brooktrout Software, also comes along as president/COO of eYak.

"They have a product that has a huge amount of depth," said Friend. "There's just no shortcut to developing a product like that, which is why it's so much better to buy one that's worked than to build one yourself."

Friend acknowledged there would be some employee duplication in the two companies that are based in neighboring Boston suburbs.

"Whether those people will be redeployed or let go and other people hired, I don't know," he said. "I think it's too soon to answer that."

It's not too soon to say that Brooktrout answered a serious eYak need, Friend said.

"This is almost exactly what was in our business plan in terms of what we needed to build ourselves," he said. "You can build a product like this maybe in a year, but it would take you another two years to find out all the problems and things you forgot."