September 25, 2022

Unitranche

Supportive Business Potential

LabWare acquires data firm CompassRed

WILMINGTON – In a merger of two established Delaware firms, LabWare Holdings has acquired data analytics firm CompassRed, the companies announced Tuesday morning.

LabWare, a 34-year-old global laboratory information management provider headquartered in Alapocas just northwest of Wilmington, bought the small CompassRed in part to create a dedicated LabWare Data Analytics Innovation Center to serve its customers. Terms of the deal between the two private companies were not disclosed.

“As the global leader for Laboratory Information Management Systems (LIMS) and Electronic Laboratory Notebook (ELN), our business strategy has been centered on helping companies transform, automate, and service the modern-day laboratory,” said Vance Kershner, president and CEO of LabWare, in a statement announcing the deal. “Data creates value, but that value is magnified dramatically when companies use new innovative practices and technology to process that data into forms of actionable knowledge that transform the way they do business. With this acquisition, LabWare will establish and possess a proven advanced data analytics innovation center that will allow us to accelerate how we help our customers capitalize on the explosive growth potential provided by this rich new resource.”

CEO Patrick Callahan | PHOTO COURTESY OF COMPASSRED

Founded by CEO Patrick Callahan and partners Darren Mahoney and Bob Dawes, CompassRed has quickly developed a leading reputation in Wilmington for its growth, vision and industry leadership. Callahan chairs the state’s Science & Tech Advisors Group, which helps attract new firms to the state, while also founding the Delaware Data Innovation Lab to tackle more difficult societal problems – it was recently acquired by Tech Impact in Wilmington.

CompassRed has helped big businesses, state agencies and more crunch large datasets to extract useful insights. It coalesced the Goodwill of Southern New Jersey & Philadelphia’s inventory to allow it to dynamically price items, improving sales; used historical and weather data to better predict demand for Pabst Blue Ribbon beer; and integrated state and national data to aid policy decisions by state leaders, among other projects.

It’s been named to the Inc. 5000 list of fastest growing private companies for two consecutive years, ranking 4,634th last year with sales growth of 54% over the preceding three years. In 2020, it ranked 899th.

“We were still growing. I just wanted to do it faster. I wanted to be able to do something where we can be on a global scale,” Callahan told Delaware Business Times about his motivation to sell the 10-year-old firm.

Callahan met Kershner at a community event some years ago, where the LabWare chief executive impressed the data analyst with his knowledge of his work.

“I got talking to [Vance] about what we did, and he got it. There’s not a lot of people who do. I’m still trying to explain to my wife what we do, but he got it right away,” Callahan recalled, noting they sought to find a project to work on together in the future.

A few months into the pandemic, CompassRed began working with LabWare as the company’s services ramped up amid the research into the COVID-19 vaccines. Meeting weekly with LabWare executives to figure out how to improve processes, the two companies quickly developed a close working relationship.

“The culture was in lockstep with ours,” Callahan said, adding that helped convince them to further solidify the relationship.

In January, they signed off on an acquisition that would see CompassRed serve as LabWare’s data analytics and product development firm, while also allowing the firm to continue its contract commercial service work – its clients have included Wawa, Twitter, DuPont, CSC, W. L. Gore & Associates, among others. Callahan has already spent time talking with LabWare clients in Brazil and Australia.

“It would have taken me years to be able to do what we’re doing now,” he said.

Now under LabWare’s wing, CompassRed has moved its operations and 15 employees from CSC Station in Wilmington to its offices at 3 Mill Road in Alapocas along the bank of the Brandywine Creek. With a dual mission, Callahan said he expects to begin adding staff soon – he hopes to one day employ as many as 50 at the firm.

“As long as the University of Delaware can continue to produce both computer science and data science program grads, we’ll have spots. We’re hoping they are a big feeder for us in the future,” he said.

For Callahan, the deal with LabWare represents an investment to keep his visionary company firmly rooted in Delaware – he also sold his stake in the former marketing firm The Archer Group, while Kershner, a serial entrepreneur, backed Wilmington’s Goober’s Garage and Goober’s Diner, among other ventures.

While CompassRed was briefly started in San Francisco, Callahan brought the company back to Delaware through family ties and has seen the local market embrace it.

“I can’t imagine trying to do what we did here in San Francisco, because it would be equivalent to me, being a 15-person company, getting in front of Bill Gates and Microsoft,” he said, appreciating the opportunities the First State has afforded.