On Dec. 1, the University of Minnesota (U of M) took the first steps to divest itself of the development and marketing of the popular swine recordkeeping software program, PigCHAMP. The new stakeholders are a small group of employees and consultants currently active in the day-to-day management of the program.

The agreement gives shareholders exclusive, worldwide rights to the software developed at the U of M in the mid-'80s. Simply put, the U of M has turned over the entire PigCHAMP package, giving them extensive rights to manage and develop it. In turn, the University will receive annual cash payments, royalties and full access to the database.

William Russell, president of Russell Associates, LeSueur, MN, led the negotiations and will serve as the new CEO. Glen Leighty, U.S. sales manager, will assume responsibilities for business planning, sales and marketing. Both are investors in the venture.

"Any employee as of the takeover that wishes to buy stock will be allowed to," Russell notes. A dozen or less investors are anticipated.

University negotiators made it clear they were looking for a Minnesota-based, agriculturally oriented company that would provide full access to the confidential database. They were looking for "honest brokers." "In other words, we were not looking at PigCHAMP for the customer list or as a way of eliminating competition," Leighty explains.

The company will be capitalized by the initial sale of 200,000 shares. The First Farmers & Merchants Bank of LeSueur (MN) will provide a line of operating credit.

The transaction, in a real sense, is a lease arrangement. The U of M will continue to market and service the software program through a licensing agreement with PigCHAMP Inc., the newly formed Minnesota Corporation.

"We have the authority to do most anything with it that you could do if you (actually) owned it, including mergers or whatever," says Russell. Any modifications or additions or new products that are developed belong to PigCHAMP Inc.

"Over the period of seven years, the estimated cost (cash payments and royalties) may total up to $1 million, depending on the volume of sales," Russell explains.

"Even though the Windows product and improvements may phase out any of the products originally acquired," he continues. "We'll actually be paying royalties for a while on newly developed products that don't belong to the university. Within seven years, anything we originally leased may be gone." University technical support for upgrades will continue, in trade, for allowing researchers access to the data.

Other anticipated changes:

* Conversion from DOS software to Windows within a year. The original DOS format will not be completely eliminated, to ensure ongoing support for those without Windows capabilities.

* Key U of M veterinary college staff, scientists and "strong users" from around the world will be asked to serve as advisers for new product development.

* A new, multi-level maintenance and support fee structure will match services to customer wants and needs.

* Some new concepts, technical support and training will be expanded, on the Internet.

* Compatibility with NPPC's Production & Financial Standards. Russell can be reached at (507) 665-6266; or contact Leighty at (612) 624-7425.