The acquisition of transcoding vendor Telestream by private equity firm Thoma Bravo is a deal “that makes sense and a great return for investors and employees,” Telestream CEO Dan Castles (pictured) told Fergal Ringrose.
The transaction is designed to facilitate further growth of Telestream and provide additional capital for further market expansion and acquisitions. Dan Castles told TVBEurope that Thoma Bravo had been researching the digital video market to determine if it was a sector worth investing in, and to establish a point of entry.
Following that research, Thoma Bravo looked for a “platform investment,” according to Castles, “and Telestream represents a platform company that has done some acquisitions in the past”, including Popwire, Vara Software and Anystream.
Castles said Thoma Bravo is a strategic investment firm that looks for market leaders with a history of previous self-financed acquisitions, a strong management team, and a constant track record of financial success. Telestream has been profitable since 2001 – at the close of 2011 the company reports 13 straight years of record sales growth.
For Telestream’s part, “one year ago the company was not looking to do anything like this at all,” Castles told TVBEurope. However, the Anystream acquisition “put us on the radar” of the private investment community and Telestream hired professional advisors in the first quarter of 2011 to put feelers into the marketplace.
“There are limitations to the self-financed approach” to growth by acquisition, and on the flip side Telestream management felt “at some point we had to return a return to our loyal investors, who have been with us for 14 years,” he said.
“Thoma Bravo is excited to partner with Telestream’s existing management team to continue to expand the company’s market leadership position,” said Holden Spaht, partner at Thoma Bravo. “We look forward to building on the company’s impressive reputation for product innovation, strategic acquisitions, and world-class customer service.”
“The video ecosystem continues to grow and expand as customers require increasingly complex tools to manage their end-to-end video workflows,” added Thoma Bravo VP, A J Rohde. “Thoma Bravo sees significant opportunity in the digital media market, and Telestream is well positioned as a strong platform for increased investment in the industry.”
The transaction is expected to close in early January 2012. Terms of the deal were not disclosed as both companies are privately held. Telestream will continue to operate as an independent entity with existing management teams continuing their current roles. Headquarters will remain in Nevada City, California with offices in Virginia, Sweden and Germany.