The company was founded in 1996 by married couple Phillip Merrick (who was chief executive) and Caren Merrick (who was vice president for marketing using the name Caren DeWitt at the time) to use Web standards such as Hypertext Transfer Protocol (HTTP) and (later) XML to allow software applications to communicate with one another in real time.

[3][4] By 1999 the company had clients such as DHL Express, Dell, Dun & Bradstreet and Hewlett-Packard, and had completed several rounds of venture capital investment.

[5] Mayfield Fund and FBR Technology Venture Partners (an arm of Friedman Billings Ramsey) were among investors.

[12][13] While revenues grew, the company posted continuing operating losses due to the early 2000s recession following the bursting of the dot-com bubble through 2002.

The Mind Electric developed a technology called Glue, and its founder Graham Glass became the webMethods chief technical officer.

[18][19] By October, 2004, after revenues declined and losses rose, Phillip Merrick was replaced as CEO by David Mitchell.

[23] As part of a larger trend of consolidation, Software AG (based in Darmstadt, Germany) bid to acquire webMethods in April 2007 for an estimated $546 million in cash.

[2] In 2011, Caren Merrick ran as a Republican for the Virginia state senate, saying her history with webMethods made her a "jobs creator", but was defeated by Barbara Favola.