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Venture partners to buy Netsmart

Netsmart Technologies Inc., the Great River-based

provider of software for health and human services organizations, said

yesterday it has agreed to be acquired by two venture capital companies for

about $115million.

Netsmart said it has agreed to be acquired by Insight Venture Partners,

based in Manhattan, and Bessemer Venture Partners, headquartered in Menlo Park,

Calif.

After the deal is concluded, Netsmart will no longer be a publicly traded

company on the Nasdaq exchange.

Shareholders will receive $16.50 a share, a 23.5 percent premium to the

average closing price of $13.36 over the past 20 days.

Netsmart shares closed yesterday at $16.13, up $1.43.

Stockholder and regulatory approvals will be necessary before the deal can

be concluded, which Netsmart said it hopes to do early in 2007.

The company said its executive management team "will participate in the

ownership of the company."

"We believe this transaction will enable us to better scale for anticipated

growth, both organically and by acquisition, and will provide us with easier

access to capital for new product development and technology innovations to

better service our customers," James L. Conway, Netsmart's chairman and chief

executive, said in a statement before the markets opened yesterday.

Netsmart's announcement said Bessemer Venture Partners is the oldest

capital practice in the United States and manages some $2 billion in venture

funds. More than 100 Bessemer companies have gone public, including Gartner

Group, Staples and W.R. Grace.

In its latest fiscal quarter, Netsmart reported revenue of $15.3 million,

an 81 percent increase over the same period last year.

The company earned about $1 million in the quarter that ended Sept. 30,

compared with $379,000 for the similar period last year.

Netsmart has made a few acquisitions of its own. In August it acquired a

business unit of Intelligent Systems Corp. of Norcross, Ga., and in 2003 it

bought most of the assets of CareNet, the health care division of Adia

Information Management Corp. of Ann Arbor, Mich.

Netsmart has about 322 employees on Long Island.

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