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Merger years in the making

Rochester Business Journal
January 11, 2013

Pictometry International Corp. surprised many people this week when it merged with a fast-rising company based in the Seattle area. The deal had been in the works for almost two years, however.
Henrietta-based Pictometry provides detailed aerial images to governments, insurance agencies and utility companies, which then can view infrastructure, buildings and land from all sides. It announced Monday that it had merged with EagleView Technologies Inc. of Bothell, Wash.
EagleView uses aerial images to provide automated 3-D measurement tools and analytics to commercial customers, primarily in the insurance and construction industries. It has been partnering with Pictometry to use the local firm's aerial images since EagleView was founded in 2008.
EagleView CEO Chris Barrow said the two companies began talks on a merger more than 18 months ago. A merger made sense immediately, but the details had to be ironed out.
"Once we believed these two businesses belonged together, a deal could have happened in a number of different ways," said Barrow, who was in Rochester this week for meetings. "How things ultimately turned out, with it being an equal merger not involving cash, was part of why it took so long to happen."
EagleView and Pictometry logged combined pro forma revenues of more than $100 million in 2012, officials said. The two companies merged in a merger-of-equals stock transaction. Both companies became wholly owned subsidiaries of a new entity, temporarily named EagleView Holdings.
Barrow said the company will hire an outside firm to rebrand it with a new name within the next few months. The combined business has some 500 employees.
"Pictometry has a strong brand in this industry, especially in the government space, and EagleView has a strong brand in the commercial space," Barrow said. "We want to maintain the strength of those brands as much as possible."
As a result of the merger, the former shareholders of EagleView and Pictometry will each hold some 50 percent of the outstanding capital stock of the combined company. The merger was approved unanimously by the boards of EagleView and Pictometry and approved by the shareholders of both companies.
George Conboy, president of Brighton Securities Corp., said that while this kind of merger of equals may be rare, it shows confidence among shareholders.
"It is a little unusual," he said. "It's common that when one company acquires another, one group of shareholders seems like the controlling group in that transaction. The merger between EagleView and Pictometry suggests that the shareholders of these two companies were very comfortable with each other and very comfortable with their merging businesses."
Barrow will lead the management team of the new combined company as its president and CEO. Pictometry CEO Richard Hurwitz will leave the business. The management team will draw on executives from both companies, officials said.
Barrow said outside of restructuring the company's executive team, none of Pictometry's 300 employees-including 200 in Rochester-will be immediately affected by the merger. Indeed, while Barrow will continue to live near Seattle, he said the new company will view its headquarters as being equally divided between Rochester and Bothell.
The new six-person board of directors will feature three prior EagleView directors: Barrow, along with investors Curtis Pilot and Roger McOmber. The board also will include prior Pictometry directors Thomas Golisano, Thomas Hogan and Chris Mitchell.
Mitchell is a managing director of Spectrum Equity Investors L.P. Spectrum invested $63 million in Pictometry in 2011. Mitchell declined to comment on the merger, deferring all inquiries to Barrow.
The merger falls in line with the evolution of Pictometry's business since Hurwitz became CEO in August 2010.
Since Pictometry formed in 2000, the core of the company's business has been its government work. Hurwitz's vision was to grow the commercial segment of the business.
Hurwitz was unavailable to comment for this story. He told the Rochester Business Journal in December, however, that Pictometry has seen revenue growth each of the past two years in large part due to the consolidation of its commercial business.
When he joined Pictometry, Hurwitz said, the company had 20 target industries in its commercial segment. It now has two primary ones: insurance and infrastructure companies for utilities, oil and gas, and transportation, for example. A merger with EagleView represented perhaps the biggest possible leap for Pictometry in its commercial business.
"Bringing together the complementary talents and capabilities of these two category-defining companies represents a crowning step in Pictometry's strategic evolution," said Hurwitz in a statement. "This merger creates an integrated company with greater scale and diversification that will afford tremendous upside to customers and shareholders."
While Pictometry has been one of the region's fastest-growing companies over the past decade, EagleView's revenues have skyrocketed in just four years.
EagleView, which has 200 employees, ranked 133rd on Inc. magazine's most recent list of the 5,000 fastest-growing private companies in the nation. The article stated EagleView had revenues of $35.4 million in 2011, up from $1.4 million in 2008. Barrow said the company's revenues nearly doubled in 2012.
As of last year, Pictometry and EagleView were two of the top players in the rooftop measurement industry. Its main competitors include New Hampshire-based Aerialogics LLC and Minnesota-based RoofWalk LLC. Barrow expects the merger to give the new company a leg up.
"This is very much, for the most part, a merger of verticals," Barrow said. "EagleView was providing a finished set of solutions to its customers and Pictometry was a key supplier of a phenomenal set of images for those solutions. A lot of companies combine the government and commercial space very well, but this deal was very exciting."
Prior to obtaining its private-equity funding, Pictometry had weighed an initial public offering. When asked about the prospects of a future IPO, Barrow said it is far too early to tell.
Conboy agreed, given the size of the new company.
"At more than $100 million revenue, the combined company is still somewhat modest in size," Conboy said. "Any management team is going to first want to fully and effectively integrate the offerings of the merging companies. Only then, after they see the effective results of the merger, would they likely consider an IPO, because, frankly, then you command a better price."

1/11/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email

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