Arbor Networks Acquisition Is a Tale of Two Cities—and a Strategic Move Into Wider World of Wireless
If Arbor Networks were a tree, its roots would be in Michigan. Its branches and leaves (and some of its caretakers) would be in Massachusetts. And its proud new owners would be in Texas and Washington, DC—with a lot to live up to.
Earlier this week, Chelmsford, MA-based Arbor Networks, a maker of software for network security and management, said it is being acquired by Texas-based Tektronix Communications, which is owned by Danaher (NYSE: DHR), the technology conglomerate based in the nation’s capital. Financial terms of the deal weren’t disclosed, and at least at first the principals at Arbor and Danaher weren’t saying much beyond the platitudes that typically follow such a merger.
So I spoke with Arbor’s co-founder and chairman, Farnam Jahanian, and the company’s CEO, Colin Doherty, to hear about what the deal really means for Arbor, and to learn more about the company’s 10-year history. As I found out, its story is a pretty compelling case study of a university spinoff that got venture funding, got profitable fast, survived two recessions and a brutally competitive landscape, and emerged on the other side in a stronger position.
First, a few practicalities about the merger. Arbor will stay “whole and intact as an operating unit under the Danaher brand,” says Doherty. The company has 275 employees worldwide—about 90 in the Boston area, 90 in Ann Arbor, MI, and the rest in other locales like London and Singapore. Jahanian is exiting the company, while Doherty will stay on as president of Arbor, which will become part of Danaher’s communications and enterprise group (which comprises a half-dozen companies, including Tektronix Communications, Fluke Networks, and AirMagnet).
Arbor will provide its new parent company with deep Internet security knowledge—what Doherty calls a “security beachhead.” Now “they can detect, secure, and mitigate network security. It was a really good fit for them,” he says. And now, with Danaher’s size and influence, he says, “it’s a unique opportunity for us to change our model…and be part of a larger public vehicle.”
Arbor Networks was founded in 2000 by Jahanian, who is chair of computer science and engineering at the University of Michigan, and Rob Malan, who was Jahanian’s Ph.D. student at U-M and is now Arbor’s chief technology officer (he will stay on as CTO). The company’s core technology, based on Malan’s and Jahanian’s research, involves software that monitors entire computer networks—from data centers and Internet service providers to broadband customers and mobile interfaces—and protects them against all manner of security threats, most notably, denial-of-service attacks that can shut down big networks and popular websites. (Basically, this means there’s a good chance your Internet service … Next Page »