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February 2008
has purchased
New York and London
and replaced the bank of New York Mellon as its primary investor with
Palo Alto, California


Netik has long been recognized as a leading provider of financial data integration, financial data warehousing, data hub, and information-reporting solutions for the securities industry.  In 2004, Netik’s founders sold the Company to Bank of New York (BNY), so that BNY could use Netik as the foundation of a new outsourcing business.  In early 2007, following the announcement of BNY’s merger with Mellon Financial, and knowing the bank’s strategy had changed, the founders (who had remained as Netik’s managers) approached Bank Management with an eye towards repurchasing the Company.  They asked M&A to help arrange private equity financing for the transaction.

During the summer of 2007, M&A and Management held conversations with several leading private equity houses.  Symphony Technology Group, based in Palo Alto, was selected as the best potential partner due to their desire to invest into Netik and to build a leading investor services business based on key financial services and software through organic growth and acquisitions.  It also helped that one of the Symphony funds controlled CAPCO and that all parties saw potential benefits to brining Netik and CRDS together.

At 12:20 AM on Christmas Day 2007, Netik LLC entered into an agreement to acquire the Capco Reference Data Services (CRDS) division of Capco.  At the same time, Netik replaced The Bank of New York Mellon Corp (BNYMellon ) with Symphony Technology Group as the primary investor in the business.  The deal closed a month later.

The transaction was structured as a merger of CRDS into Netik, combined with a capital infusion into Netik by Symphony – and a simultaneous purchase by Symphony of some, but not all shares of Netik held by BNYMellon.  At the same time the bank maintains a contractual relationship with Netik for services. The transaction allowed BNYMellon to reduce its position in an asset deemed no longer strategic.  It allowed Symphony to increase its presence in the sector and leverage its investment in CapCo; it allowed CRDS to have a home with a management group that understands and values the product line; it allowed Netik management to have significant equity participation and help build the Company further, and it allows customers access to pre-populated multi source and multi view reference data content to data warehouses/marts and deliver this via fully managed.

Marlin & Associates New York LLC assisted Netik’s management team in identifying a number of financial sponsors; presented Netik to these sponsors; managed the process; and advised and assisted Management as they negotiated with several interested parties and ultimately closed this transaction.

Netik Targets Service model with Capco Reference Data Services Buy, Symphony as New Majority Investor

February 11, 2008

(February 11th 2008) Data warehouse provider Netik has completed a buyout of its business from The Bank of New York Mellon Corporation and simultaneously acquired Capco Reference Data Services (CRDS) from Capco. Netik is now pursuing a vision of transforming from a purely software business into a software and service business, bringing together the CRDS capability to scrub multiple data sources to create a "single version of the truth" with the Netik data warehouse technology for reporting and data management. The data warehouse fulfils the role of on–site "container" and handles downstream distribution of the cleansed data. The vendor says it is already working with five clients interested in this expanded service–based proposition.

The transaction was achieved through a strategic investment by Palo Alto–based Symphony Technology Group — which, via another fund, is also an investor in Capco. The fact that Symphony is now primary investor in both Netik and Capco is essentially a coincidence, according to Netik — with Symphony having been raised as a potential investor by Netik’s advisor in the deal Marlin & Associates — but is one element of synergy in a move described by Netik founder and CEO John Wise as "the most synergistic thing Netik has ever done".

There has been speculation that Netik’s ownership might change since the merger of its majority investor Bank of New York with Mellon brought two competing technologies — Netik’s and Mellon–owned Eagle Investment Services — under the same roof. Wise insists Netik’s relationship with the bank remains strong, and says recently a division of the bank selected the Netik technology over the Eagle technology. Rather than reflecting a decision by the bank to pursue Eagle as its strategic data warehousing solution, in place of Netik, this move by Netik originated, Wise says, from a board meeting in October 2006 at which it was decided that a more traditional private equity backer would be preferable to being majority–owned by a bank. Since some 40 per cent of Netik’s clients are in the asset servicing space, it was proving a limitation to be owned by an entity potential customers perceived as a competitor, Wise says. (Indeed, he reckons, the change of ownership has already proved beneficial, with a couple of deals having been struck in the outsourcing space since Netik has been able, under NDA, to confirm to prospects that its share ownership is no long majority controlled by Bank of New York Mellon.)

He adds that he and Colin Close, now president of Netik, had also decided to pursue the move to a service model, responding to frequent client requests to provide the Netik data management and reporting solution on that basis. CRDS came into the frame as a potential acquisition because it was suggested that the business would be a better fit for Netik than for a consulting company.

Under the new set–up, the entire CRDS business, including the assets acquired through its purchase of Iverson, its outsourcing deal with ING and the Reference Data Manager rules–based matching system it inherited post Capco’s abortive joint venture with Reuters (Synetix), transfers to Netik. Wise says all 160 employees will join Netik, including Brian Lott, the COO of CRDS. Post the acquisition, Netik has more than 260 staff in five centres – California, New York, London, Dubai and Bangalore – servicing more than 80 financial institutions in Asia, the Middle East, Africa, Europe and North America. Symphony is now the majority owner of Netik, with Bank of New York Mellon a minority stakeholder.

The deal with Capco is so "synergistic", he reckons, because "people don’t just want a consolidated feed: they want something they can look at". While CRDS has been providing files of scrubbed data, Netik identified the opportunity to put the files into a data warehouse, which also has all the integration capabilities required to facilitate distribution of the data to other systems throughout the enterprise. "That was the vision we saw," Wise says: "To take the feed into the container, accessible to anyone as a single source of data, replacing multiple distributed security masters." Adds Close: "A key role of the container is to facilitate the distribution of that single source of data in and among the organisation upstream and downstream. That’s what the Netik heritage technology does."

According to Wise, when Netik took the idea to the marketplace, five customers immediately expressed an interest: three projects are under way with clients from the CRDS business, and another two projects are also progressing apace, he says. There is, Close adds, "huge interest in the extended reference data capability" among Netik’s heritage clients.

Netik is targeting asset managers and asset servicers with the new proposition, including talking to asset servicers about the possibility of white labelling the Netik service. Several options will be available to clients, including taking just the scrubbed files or having those delivered into another data warehouse, as well as taking the Netik data warehouse with data pre–populated and maintained by Netik, and taking advantage of a version of the service hosted by Netik itself.

Copyright © 2007 A–Team Group. All rights reserved.

About Marlin & Associates

Founded in 2002, Marlin & Associates New York LLC is a boutique investment banking and strategic consulting firm focused on providing highly strategic, transaction–related services to U.S. and international middle–market firms engaged in technology, information, on–line media and business services. Marlin & Associates’ professionals have advised on over 200 successfully completed transactions in the sector. The firm is based in New York City with a Washington, DC office and has been the recipient of numerous awards.

In December, Marlin & Associates was recognized as the Middle Market Investment Banking Firm of the Year. In addition, Marlin took top honors in three "Deal–of–the–Year" categories. In July, the firm was acknowledged as the Middle Market Financing Agent of the Year — Equity, and also was awarded honors in three Middle Market Financing "Deal–of–the–Year" categories.


Michael Maxworthy | (646) 495–5141 | |

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