Tribune Technology Writer
November 3, 2000
The chief marketer for Divine Interventures
Inc. -- and the person credited with thrusting
Divine and its founder, Andrew "Flip"
Filipowski, into the national spotlight last year
-- resigned Thursday in a dispute over control
of the marketing subsidiary she founded.
Andrew 'Flip' Filipowski
(Tribune photo by Charles Osgood)
executive, Karen Andre, is a blow to morale
at the Lisle-based Internet incubator, where she was considered one of the
more successful entrepreneurs and one of Filipowski's more loyal
supporters.
Her departure also is a sign of the intense struggles occurring inside the
publicly traded company as Filipowski's team continues to cut costs and
look for opportunities to merge and sell some of the 53 companies in which
Divine has invested since last year.
Divine's stock has declined steadily since its $9 per share public offering in
July amid a sell-off in Internet-related issues. It closed at $3.06 Thursday, up
six cents.
"Buzz is a Divine-owned company. They have a strategic vision; it differs
from mine. I stepped aside," Andre said Thursday.
Sources said Andre quit because she felt powerless in negotiations over
Buzz MSP's future and its capitalization -- a process that determines its
estimated market value and the proportionate shares of various stakeholders
based on contributions of money or services.
Divine owns 80 percent of Buzz, and Divine's founding partners own the
remaining shares, which gave Andre virtually no leverage in negotiating
equity for employees. Employees hold shares in the Divine parent, which
also is Buzz's main client.
The 90-employee firm has grown rapidly to about $12 million in annual
sales, while drawing down about $4 million from a revolving credit facility
established by Divine, according to sources familiar with the company's
finances.
Professional services firms are hard to value, but based on a rule of thumb
assigning their worth between 1.5 and 3.5 times sales, Buzz would be worth
between $18 million and $42 million.
Buzz acting CEO Tom Bush, vice president of business development,
confirmed that negotiations are ongoing and the process "has been taking
some time."
"Frankly, (Divine's incubator model) is an untested business model, and
maybe it's being tested now," he said.
Andre had been with Filipowski for years, since she was communications
chief at his former software company, Platinum Technology International Inc.
Still, Filipowski said Andre's resignation, submitted in writing, was "not
unexpected."
"I'm one of Karen's biggest fans. She's a wonderful lady. I wish her well," he
said. "Buzz is a very valuable and wonderful organization, and it will do
terrific."
Divine is one of Buzz's main clients, though Andre had been positioning the
firm to become independent.
Buzz recently dropped "Divine" from its name and substituted MSP, an
acronym for "marketing services provider." About half of Buzz's clients are
not affiliated with Divine.
Rumors of a sale have been circulating for weeks, partly because of the
capitalization talks but also because Filipowski's team is trying to increase
the value of Divine's holdings by selling or merging companies now that the
outlook for initial public offerings is bleak.
Asked about the rumored sale of Buzz and other services firms, Filipowski
said, "As far as I know, every property we have is always for sale at the
right price."
He said Divine has been entertaining offers from different parties, though he
declined to name them. "Sometimes they're offers for a sale, and sometimes
for a roll-up," in which Divine and a partner would merge several companies
and share ownership.