PhillyDeals: Cofounders pocket $40M for Clarix

When a multinational software company agreed to pay $40 million cash for his Web-based Radnor drug-test firm, Clarix L.L.C., chief executive Jagath Wanninayake and his colleagues didn't have to share their profit with venture capitalists or private-equity investors.

Wanninayake had worked in v.c., at Blue Rock Capital in Delaware, after graduating from Swarthmore College in 1998. But four years later, when he started Clarix, he and his "like-minded colleagues" - including cofounders Adrian Talapan and Graham Wert - had made a decision to finance their company only from personal funds and profit. "We wanted to build a long-standing, sustainable business," he said. "We weren't interested in a quick-hit-and-sale strategy."

Clarix now boasts "11 of the top 25 pharmaceutical companies," including Novartis, Allergan and Genzyme, among its clients. Buyer Phase Forward, a publicly traded clinical-trial-software vendor in Waltham, Mass., says Clarix sales will roughly double this year, to $6.3 million.

So why sell now? "Phase Forward is a like-minded team at a larger company. They understand software and technology. Most important," says Wanninayake, "they understood the cultural intangibles that go to building a successful software company: the emphasis on hiring the right talent, on encouraging creativity, on things that are easy to say but hard to do."

Phase Forward chief executive Robert Kirby Weiler, who once headed sales for Lotus, said in a statement that he purchased Clarix as part of his bid to expand his company's product offerings, as Big Pharma companies were trying to reduce the number of vendors and contractors they hire.

"He's a strong believer that, if you're a credible leading organization and you can add bits the customer you're selling to want, you'll win at the end of the day," said Martin Young, Weiler's vice president for corporate development. "These guys were running lean. They don't have the infrastructure. We can add that. They have done a great job of hiring really bright people out of the local schools and employment area and bringing them up to speed. . . . This company is going to grow sales, and add people."

Clarix employs 70 at its Radnor headquarters and 15 at its office in Romania, including software R&D people, testers, customer support, quality assurance, and sales. Phase Forward's Young says the number will grow as Clarix sales keep rising. Wanninayake says the Philadelphia-area connection is a big plus for his new owners: "This is a wonderful place to run a software company. There's a ton of great schools. There's a lot of pharmaceutical talent. There's a lot of research. You're very close to other metro areas, like New York. And the city is really becoming a fun place to live in or around."

Political parties ignore depression warnings

Investors are pricing bank debt as if most U.S. banks risk going broke. Credit for college students, homeowners and business expansion has been drying up. Fed chief Ben S. Bernanke is asking Congress for emergency powers. Yale economist Robert J. Shiller says in his new book Subprime Solution that the nation's headed into a 1930s-style financial depression.

There are big differences from then to now, but two key trends are heading the wrong way. Property values have fallen back to historic trend levels; they haven't collapsed, but they're still falling, as foreclosures rise. Unemployment isn't anywhere near the Great Depression's terrifying highs - but it hit a five-year high of 6.1 percent last week, as stock prices and other asset values dropped.

John McCain and Barack Obama, at their party conventions, called for pumping billions into the economy, while also cutting taxes for their key constituents. There hasn't been much talk yet of whether either candidate believes the nation should, or shouldn't, enact deep structural reforms of the Federal Reserve and other government financial agencies to stave off a general economic collapse and prevent further speculative bubbles.

Franklin D. Roosevelt also avoided detailed proposals in his 1932 race. Once elected, he moved quickly and in some radical directions to reorganize government and markets.

Reporters, campaign donors and the general public need to ask the hard questions: What's wrong? What will you do?

Or would we prefer the victor surprise us?