Activant Sold to Two Private Equity Firms

Activant Solutions has signed a definitive agreement to be acquired by two private equity investment firms, Hellman & Friedman and Thoma Cressey Equity Partners. The firms will acquire Activant Solutions Holdings Inc. and all its subsidiaries from HM Capital Partners LLC. Terms of the deal were not disclosed. Activant declined to comment on the sale. Those involved in the deal are prohibited from commenting, according to the 8-K filing. However, one recent news report indicated that 100 percent of the company, as well as the management team, were included in the deal.

by Amy Antenora
Editor, aftermarketNews.com

AUSTIN, TX — Activant Solutions has signed a definitive agreement to be acquired by two private equity investment firms, Hellman & Friedman and Thoma Cressey Equity Partners. The firms will acquire Activant Solutions Holdings Inc. and all its subsidiaries from HM Capital Partners LLC.

Terms of the deal were not disclosed. Activant declined to comment on the sale. Those involved in the deal are prohibited from commenting, according to the 8-K filing. However, one recent news report indicated that 100 percent of the company, as well as the management team, were included in the deal. The same report said Austin, TX-based Activant currently generates about $400 million in revenues and has EBITA approaching $100 million.

Activant has been through many changes since it was founded in 1972. The company was born out of a merger between Cooperative Computing Inc. (CCI) and Triad, which later became now as CCI/Triad or CCITRIAD. In 2003, just prior to the AAPEX show that year, the company announced it would change its name to Activant Solutions, Inc., as part of a major reorganization for the software company. Just one year prior, software executive Hoon Chung was named to lead Activant’s Automotive division as general manager. (Editor’s note: Hoon Chung left the company two years later in 2004 to become president and CEO of DST. Activant Chairman, President and CEO Mike Aviles assumed his duties on an interim basis until Tom Aliotti was named VP and GM of the Automotive Group in the fall of 2005. Aviles also left the company in 2004, just six months after Chung’s departure. )

The company also underwent significant expansion over the past several years, partnering with companies such as Vertical Development, DST and MISG, to enhance its data offerings and market reach. Financially speaking, 2002 was a breakthrough year for CCITRIAD as well. The company achieved noteworthy financial milestones during its fiscal year, generating $49.1 million in EBITDA, which is 37 percent higher the previous year. The company also paid down $38.4 million of senior debt.

Just this past year, filed paperwork to go public but chose not to announce an initial public offering, which is commonly done when the investment community isn’t open to IPOs., according to one recent report. Instead, company bought another software business from Thoma Cressey and LLR Partners.

According to Larry Jones, CEO of Activant Solutions, the company’s steady growth track was the reason it decided to partner with Hellman & Friedman and Thoma Cressey.

“Over the past year, Activant has been on a steady and fast-paced climb in the market through organic growth and acquisitions,” said Jones. “While we have looked at a number of strategic options to best position the company for the future, we believe we have found the right partners in Hellman & Friedman and Thoma Cressey to continue the company’s success.”

Based in San Francisco, Hellman & Friedman is one of the nation’s leading private equity firms involved in vertical market software businesses. Since its founding in 1984, the firm has raised and managed more than $8 billion of committed capital. One of the businesses the company has invested in is a familiar name to this industry: Mitchell International, Inc. (To learn more about Mitchell International, see today’s story “Mitchell Meets 60 Year Milestone.”)

David Tunnell, managing director of Hellman & Friedman, said, “We are very impressed with Activant’s market leading position, vertical market expertise and strong management team. Activant exemplifies the type of company in which we like to invest. We look forward to supporting the company in continuing to build upon its foundation of high-quality customer relationships and strong business franchise.”

Thoma Cressey’s investments focus on companies in the software, business services, healthcare and consumer products industries. The firm, which has been investing for 25 years, currently manages approximately $2 billion of equity capital.

“We believe there are significant opportunities to continue and even accelerate Activant’s growth trajectory by working in partnership with management to execute on its established business plan,” said Orlando Bravo, managing partner of Thoma Cressey Equity Partners.

The transaction is expected to close during Activant’s third fiscal quarter, which ends June 30. Activant’s existing indebtedness will be refinanced in connection with the transaction.

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