Xchange Auction Set for March 11

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The assets of Boston-based customer relationship management software company Xchange Inc. will be auctioned March 11.

The auction will be held at the law offices of Reimer and Braunstein LLP in Boston and include everything from customer contracts and patents to computers, equipment and office furniture, according to reports.

Xchange, which closed late last month, was founded by Andy Frawley in 1994 as Exchange Applications Inc. It sold CRM and campaign management applications to companies including Allstate, Staples and Fidelity. On average, an Xchange application cost about $500,000 to license.

The company had lost money for several years, and its stock was delisted from Nasdaq last year.

According to reports, Xchange tried to go private and raise new capital after a restructuring last year. But the financing plan fell through, and the company underwent a bank foreclosure. During the past two months, it shed 75 employees. At its prime, Xchange employed 450.

Analysts said it was no surprise that Xchange closed.

"There were signs of trouble at Xchange that stretched back two years," said Eric Schmitt, a senior analyst for database marketing at Forrester Research. "They just burned through a tremendous amount of money and showed a real lack of fiscal discipline."

About 75 companies still use Xchange applications, Schmitt said, and likely will be able to continue using them for some time.

"A lot of customers are self-sufficient or have service providers, like Harte-Hanks or Epsilon, providing support," he said. "I don't think there are going to be a lot of people out buying new replacement software any time soon."

Schmitt said 24 companies expressed interest in buying Xchange's assets, maintaining its products and supporting its customers. Likely buyers include Chordiant Software, DoubleClick and Unica, reports said.

Xchange's demise "highlights the risk of flying solo, or just buying a piece of software and running it yourself," he said. "Companies that work with a service provider to deploy a database and run the software are better off in the long run."


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