Controlling interest in e.magination sold

Md. venture capital firm buys Internet company

January 31, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

E.magination Network LLC, a Baltimore Internet firm, said yesterday that it sold controlling interest to a Maryland venture capital company as part of an effort to grow during the technology downturn.

Financial terms of the deal were not disclosed.

"I think this company in particular has done a really good job of growing its market share and maintaining its revenue in really tough times," said Daniel J. Roche, chairman of the Severna Park investment firm Roche Capital LLC, which invested in e.magination. "Most everyone else has folded their tents."

E.magination was founded in 1999 when Brian Ocheltree and Syd Rubin merged their businesses. Its services include marketing, Web design, advertising and e-commerce.

Under the deal, Ocheltree, formerly e.magination chief executive officer, becomes the company's president. Roche is e.magination's new chairman and chief executive, and Rubin, who had been president, is a director.

The 70-employee company in Locust Point has been profitable almost every quarter since it was founded, Ocheltree said. While the company saw tremendous growth during its first two years, Ocheltree said, revenue has been relatively flat in the past year and a half as the technology industry struggles.

"Relatively speaking, we're a huge success because we haven't dwindled away like a lot of our competition," Ocheltree said. "But in reality, we haven't seen the growth that we expected back in '99-2000."

With the company structured to handle growth that was forecast during the technology boom but never came, and with six managing partners active in the company, e.magination decided to have Roche buy out five of the partners and add capital to its cash flow.

"It was a move that we all agreed was required due to the slow times," Ocheltree said. "It was really kind of an economic decision by our board."

Roche said he believes that capital spending will pick up at the end of this year and into next year, and he expects e.magination to grow.

"We'll be one of the best high-quality [information technology] service providers in the mid-Atlantic area," Roche said.

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