KVault workers share £19m windfall after Veritas takeover

One of the UK's youngest but fastest growing technology companies has been sold to one of America's biggest Silicon Valley firms for $225m (£125m), producing an £18.8m windfall for its Reading-based staff and management.

One of the UK's youngest but fastest growing technology companies has been sold to one of America's biggest Silicon Valley firms for $225m (£125m), producing an £18.8m windfall for its Reading-based staff and management.

KVault Software has grown from a start-up at the end of 1999 into the world's leading storage software business specialising in the storing and archiving of e-mails. Although it is still loss making, it generated £23m of sales in 2003 and has more than 1,000 corporate customers.

Its shareholders, which include Cazenove Private Equity, Lehman Brothers and wealthy individuals such as Lord Samuel George Vestey, are being bought out by Veritas Software Corporation, which is one of the world's top 10 software companies.

KVault's success has been built on the huge growth in e-mail traffic in the past few years and the increased legal and regulatory requirements for e-mails and their document attachments to be stored. The company started with 23 software engineers, which has now doubled, and it now employs 200 staff in total with offices in the US, France, Germany and Australia.

E-mails are now increasingly used as evidence in legal cases and regulatory investigations and must be stored, quite often with no time limit. The data must also be easily accessible because lawyers and regulators can demand to see the documents at short notice.

KVault's software allows e-mails to be stored centrally but also archives them so they can be produced at a moment's notice. The software is designed to deliver cost savings to companies that are faced with a rising tide of regulatory requirements involving huge amounts of data storage.

Mike Hedger, the KVault chief executive who joined in March 2000 from Forte Software in California, said: "All the people here had worked for US software companies in the past. We knew how to do this and we were going to do it and make a global company from small beginnings. That's what we've achieved and we dominate our market."

Gary Bloom, the chief executive of Veritas, said: "With the addition of KVault Software we can deliver customers the market-leading software for storing, managing, backing up and archiving all their information."

KVault will operate as a separate unit with Veritas under Mr Hedger and his team.