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BillMatrix Corporation
- Liquidity for Early Stage Investors
- Ability to Respond Quickly
- Unleveraged Capital Structure
- Relationship Intermediary on Sale
"I was very impressed with GHP's sector knowledge and perseverance. Not many private equity firms follow a company for years. As a result they were able to close a deal in less than 1 month when the opportunity arose." full case study
Scott Walker had spent years building his business, and believed his company, BillMatrix, was poised for rapid expansion. His early stage investors, however, wanted liquidity. Moreover, Scott did not want to burden his growth prospects with a leveraged balance sheet in a typical private equity leveraged recapitalization. GHP had initially met Scott and his team in 2002 as part of GHP's research in the transaction processing sector. Due in large part to our market knowledge and our ongoing relationship, GHP shared Scott Walker's vision, and was able to close a transaction in under thirty days that provided liquidity to the original investors. Importantly, GHP was willing to complete the deal on an all equity basis, allowing the company to focus solely on growth. Scott Walker commented, "I was very impressed with GHP's sector knowledge and perseverance. Not many private equity firms follow a company for years. As a result they were able to close a deal in less than 1 month when the opportunity arose." When it came time to sell the business, GHP introduced one of its relationship bankers to the process, which resulted in the sale of the business to Fiserv, Inc. for over $350 million.
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Central Security Group
- Knowledge of Industry
- Sourced Financings
"GHP knew exactly what that they were doing. They asked the right questions, focused on the key metrics and closed on the day and for the price demanded by my former sponsor. I didn't even know you could put this type of facility in place for a... full case study
One of GHP's extended deal sourcing network called with contact information for Mark Wilson, CEO of Central Security. Central Security was a rapidly growing five year old residential security monitoring company in Tulsa, OK. Central Security's growth had exceeded the financial resources of the company's bank and equity sponsor, an obstacle Wilson wanted to remedy. The challenging aspect of the deal was balancing the existing sponsor's high price expectations while leaving the company with the financial flexibility to continue growing. Fortunately, GHP had both the industry expertise to understand the opportunity and the financial connections to arrange appropriate financing. Mark Wilson, CEO, recounted the deal, "I was frustrated by my original sponsor's lack of capital, and further frustrated that he wanted a very high price and a rapid closing. Frankly, I didn't think GHP could pull it off." GHP had recently reviewed six other security monitoring transactions and passed them all. Central Security, however, was a cut above the others with the growth prospects and disciplined operations of a market leader. GHP mounted a rapid due diligence effort and mobilized their banking relationships to provide a $100 million facility which paid off the sponsor and allowed the company ample room to grow. Wilson summarized, "GHP knew exactly what that they were doing. They asked the right questions, focused on the key metrics and closed on the day and for the price demanded by my former sponsor. I didn't even know you could put this type of facility in place for a company of our size."
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Custom House Currency Exchange
- Ability to Respond Quickly
- Minority Investor
"I was feeling a little frustrated by my initial exposure to private equity firms, but the team at Great Hill jumped into action and delivered on everything they promised. Although they have a minority interest in the company, they have added... full case study
In 2004, when GHP met Peter Gustavson, the founder and CEO of Custom House, Peter had already built a very successful business providing a wide array of foreign exchange services to the corporate and consumer markets in 7 countries throughout the world. Although he did not need additional capital at the time, GHP maintained an ongoing dialogue with Peter. Later the next year, Peter and his advisors determined that they needed a financial partner to take advantage of organic and acquisition growth opportunities. After running a competitive process, Peter signed an LOI with some other financial partner - a partner that later tried to change the terms of the deal. Peter called GHP to see if they could move forward on their original proposal, and get the deal done in a compressed time frame. Peter commented, "I was feeling a little frustrated by my initial exposure to private equity firms, but the team at Great Hill jumped into action and delivered on everything they promised. Although they have a minority interest in the company, they have added real value by helping analyze potential acquisitions, assisting with my financing strategy, and thinking through a variety of strategic issues as we continue to drive the worldwide growth of Custom House."
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Global Tower Management
- Contrarian Investment
- Rapid Consolidating Acquisitions
- Debt Financing
"Many investors piled in at high prices, but GHP had the discipline to wait, stay close to the sector and the conviction to sponsor me when others were nervous and unwilling to invest in the industry. When circumstances changed, they were... full case study
As an experienced communications investor, GHP had studied the wireless tower business several times since its creation. Initially, the market opportunity was too nascent; as the industry grew and investor exuberance took hold, GHP refrained from entering the sector due to high entry valuations driven by unreal growth expectations and the industry's easy access to capital. During the early 2000s, the downturn in the telecom market and the ensuing liquidity crunch left the public consolidators and private equity-backed players overleveraged and struggling for solvency as multiples tumbled. Despite that backdrop, GHP took the position that industry fundamentals were still favorable and viewed this as an attractive window to consolidate tower assets. GHP had cultivated a relationship with Marc Ganzi, and in 2003 Ganzi and GHP created Global Tower Partners with the acquisition of a tower portfolio from the industry's largest operator, American Tower. Over the next eighteen months, GHP was able to use its knowledge of the sector to help source and execute 10 additional acquisitions. GHP also provided additional equity and helped arrange over $200 million in debt financing. The combination of market insight, an aggressive M&A strategy, and creative financing enabled GHP and Ganzi to build Global Tower Partners into the largest privately held company in the wireless tower space. When prices rebounded in 2005, Global Tower needed access to cheaper capital. Marc Ganzi and GHP structured a sale of the business to The Blackstone Group that enabled the management team to remain at the helm and continue to build value. Marc Ganzi, "Many investors piled in at high prices, but GHP had the discipline to wait, stay close to the sector and the conviction to sponsor me when others were nervous and unwilling to invest in the industry. When circumstances changed, they were incredibly supportive of the company's cheaper need to access capital, grow the business and to compete effectively."
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GMT Group
- Executive Partnering
- Acquisition Financing
- Sector Knowledge
- Sourced Executive Talent
"The team at Great Hill quickly and enthusiastically embraced my vision for acquiring and developing my target into a premier money transfer business. Based on my initial instincts, as well as reference calls, it seemed that they really... full case study
Although the sector was out of favor at the time, Mario Trujillo had identified the money transfer business as an attractive industry, and had begun the process of identifying acquisition targets. To enhance his credibility in these discussions, he needed a knowledgeable financial partner. After meeting a number of private equity firms, Mario selected GHP. In commenting on his reasons for selecting GHP, Mario was complimentary, "The team at Great Hill quickly and enthusiastically embraced my vision for acquiring and developing my target into a premier money transfer business. Based on my initial instincts, as well as reference calls, it seemed that they really understood how to balance providing valuable input and support, without getting in the way of my ability to manage the business. They also figured out how to get my deal financed in a difficult debt market." Mario and GHP consummated the acquisition of Vigo Remittance Corp., with GHP engineering a debt facility with relationship lenders. More importantly, GHP introduced Mario to a number of candidates to help him round out senior management. Mario and his team went to work, and re-energized the growth engine at Vigo, which resulted in rapid value creation and the ultimate sale of the business to First Data Corp. for a record multiple.
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Horizon Telecom International
- Founded Company
- Financings
- Supportive During Difficult Times
- Sourced Strategic Acquisition
- IPO
"I had the operation as lean as possible, but we were only a few years old, and not big enough to achieve scale. I knew one of my competitors was for sale, but it was a tough deal. The target was literally in bankruptcy, and we had our fair... full case study
In the mid-1990's, GHP expended considerable time and effort looking for cable television investment opportunities in Latin America. Of those studied, the most compelling, and most challenging, was to form a new business to participate in the cable concession auction planned by the Brazilian government. For this effort, GHP recruited Chris Torto, a very talented American entrepreneur who was running a division in Brazil for GTech. GHP and Torto formed Horizon Telecom International and created a strategy to apply for concessions clustered in mid sized cities, primarily in the wealthy state of Sao Paulo, and waited for the Brazilian government to start the bid process that ultimately took four years. In the interim, Torto assumed the role of CEO for another GHP led telecom opportunity in the U.S., a consumer ISP, Voyager.com. Under his guidance, Voyager consummated over 25 acquisitions, went public, and was sold to a larger telecom operator. Eventually, Horizon successfully won concessions for 1.6 million homes and began operations in 2000. GHP led three rounds of financing - rounds that were increasingly difficult to attain in the face of the telecom downturn and Brazilian currency devaluation. Chris Torto did an amazing job of efficiently managing network construction and implementing cost effective customer acquisition programs. Unfortunately, the company was unable to obtain certain key programming channels, which negatively impacted the company's subscriber acquisition efforts. In recalling the difficult times, Torto commented, "I had the operation as lean as possible, but we were only a few years old, and not big enough to achieve scale. I knew one of my competitors was for sale, but it was a tough deal. The target was literally in bankruptcy, and we had our fair share of issues to contend with. Despite the complexities, GHP remained steadfast in their support. They helped me negotiate and finance the deal, which transformed the company into one of the industry leaders." With this larger platform, Torto was able to accelerate the growth trajectory, which led to the most successful IPO in Brazil in 2006 and subsequent sale to a strategic buyer.
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IGN Entertainment
- Go-private
- Contrarian Investment
- Source Strategic Acquisition
- Innovative Financing
- Negotiate Strategic Sale
"They delivered exactly as promised in the go private transaction, and their industry knowledge and financial support put us in the position to win the GameSpy deal in a highly competitive process - they understood and embraced our vision of the... full case study
Mark Jung, CEO of IGN, was a serial entrepreneur with multiple successes. When GHP reached out to him in 2002, he was at the helm of an exciting, but underfunded, opportunity. His company - IGN.com - was a still nascent survivor of the Internet bubble offering an online destination of information and entertainment for video game enthusiasts. His goal was to build the dominant player in the segment; but he was hamstrung by the difficult online ad market that left him with a market cap under $15 million, down from $1 billion post-IPO. Having thoroughly researched the sector, GHP believed in the long term value of IGN's franchise and worked with Jung, the company's founder, and the special committee of the board to engineer an all-equity go-private transaction in the summer of 2003. As part of its sector research, GHP had also been in contact with the CEO and owner of one of IGN's primary competitors - GameSpy Industries. Upon closing the initial IGN transaction, GHP positioned IGN as the acquirer of GameSpy and underwrote the transaction fully to allow IGN to prevail over a well capitalized, strategic competitor. Jung elaborated on GHP's contributions by saying, "They delivered exactly as promised in the go-private transaction, and their industry knowledge and financial support put us in the position to win the GameSpy deal in a highly competitive process - they understood and embraced our vision of the combined companies, despite what looked like a steep price at the time."
GHP also arranged an innovative structured financing to close the GameSpy deal. Jung's expectations were surpassed, "As a West Coast entrepreneur, I was not familiar with the creative use of debt financing. I expected at least 30% dilution to finance the deal, but GHP's expertise and relationships allowed us to source incredibly attractive debt and mezzanine capital to get the deal done while maintaining maximum ownership for existing investors and management."
Jung and GHP's efforts were richly rewarded in 2005 when News Corporation pre-empted an imminent public offering with a heavily negotiated cash transaction that resulted from a personal contact GHP had within the News Corp. organization. The $650 million sale resulted in over $500 million of value creation in just 24 months. Jung commented on the sale process, "We were ready to call it a day with another buyer when GHP contacted someone inside News and turned it into a last-minute bidding war. Their knowledge of the strategic players was invaluable . . . and they were very helpful during the negotiation process of retention packages for management and employees". -
Prommis Solutions
- Innovative Transaction
- Sourced Financings
- Recruited Senior Executives
"This was a complicated deal. The spinout of our business from the law firm created financing and operating challenges. I really appreciated GHP's ability to bring in talented managers to assist us and who are now on our team. GHP is a very... full case study
In 2005, GHP was looking for a way to invest in the expected downturn in residential housing when Chairman and former CEO Dan Phelan was contacted. Phelan, a lawyer by training, had built a large processing business providing foreclosure and bankruptcy technology for the residential real estate market. Interestingly, the operations were co-mingled inside a working law firm. In order to provide founder liquidity and prepare for a national business expansion, Phelan interviewed several private equity firms to lead a transaction. GHP worked with Phelan to create a stand-alone commercial enterprise in a novel "spinout" from the law firm. Importantly, GHP was able to introduce a CFO and CIO from a prior successful portfolio investment to work with Phelan on the project. In 2006, with debt financing from GHP relationship lenders and our equity sponsorship, Prommis Solutions, Inc. was founded. In Phelan's words, "This was a complicated deal. The spinout of our business from the law firm created financing and operating challenges. I really appreciated GHP's ability to bring in talented managers to assist us and who are now on our team. GHP is a very persistent group."
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PayChoice
- Innovative Debt Financing
- Maximizing Long Term Growth Over Near Term Profits
"GHP is a knowledgeable, creative and supportive financial partner. They are as comfortable with investing operating resources for growth as making acquisitions with debt. Flexibility like that is hard to find." full case study
Prior to founding PAI Group, Inc., Bill Scott successfully built and sold one of the largest private payroll companies in the industry to Fleet Bank. On choosing a financial partner for PAI Group, he summed up his thoughts by saying, "Having built a successful company, I learned that being responsive to the market was a key to value creation - so I needed a partner who understood the industry and was capable of moving quickly." Scott turned to GHP to lead the acquisition of platform company Payroll Associates and the subsequent rapid consolidation of numerous licensees across the country with a $60 million equity investment. The early plan called for significant investment in infrastructure, sales and marketing plan that traded near term profitability for growth. Not only did GHP endorse the plan, we were able to arrange an innovative debt financing through a relationship bank with covenants based not on EBITDA, but on revenue. "GHP is a knowledgeable, creative and supportive financial partner. They are as comfortable with investing operating resources for growth as making acquisitions with debt. Flexibility like that is hard to find."
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SmartMail
- Sourced Platform for Executive
- Originated Strategic Acquisition
- Negotiate Strategic Sale
"Great Hill Partners is so much more than money. They found the deal and brought it to me. They helped me build my team and kept me focused; they were dogged in their pursuit of DropShip over the years when the DropShip principals wouldn't take... full case study
Jim Martell was skeptical at first. GHP had located a nascent logistics company, an opportunity that in theory fit well with his Fed Ex background, but on first blush it seemed like a long shot. Randy Holleschau, a consultant to the U.S. Postal Service, had formed SmartMail to take advantage of new work share rules, which provided incentives to commercial mailers to handle sorting and long haul privately while letting the post office deliver "last mile" at a discounted rate. The company had early customers, including Fidelity Investments. However, the company had limited capital to build a national delivery network or expand their salesforce. Having researched the logistics area, GHP liked the structural opportunity and put the company under a letter of intent while inviting Martell to evaluate the opportunity and take the CEO spot if it suited him. Upon further study, Martell and GHP concluded it was an interesting market opportunity and purchased 80% of the business for $12 million in 1999 and provided an additional $12 million of growth equity to build out the company. Martell rolled up his sleeves and went to work implementing the vision of building a national delivery network, recruiting management, implementing systems, expanding the sales force, and opening new locations. While Martell focused on operations, GHP courted the number two player in the market, DropShip, over a three year period, culminating in an acquisition that solidified SmartMail as the market leader in its sector. The financing for the acquisition, arranged by GHP, allowed SmartMail to purchase DropShip without dilution to the management team. Over five years, Martell and his team drove sales at SmartMail from $40 million to $250 million, attracting the attention of Wall Street and strategic acquirors. SmartMail was positioned for IPO when a GHP partner received a phone call directly from the head of Deutsche Post USA (DHL) requesting a pre-emptive purchase opportunity. The sale was completed for $400 million without the assistance (or fee) of an investment banker. In summing up his SmartMail experience, Martell said "Great Hill Partners is so much more than money. They found the deal and brought it to me. They helped me build my team and kept me focused; they were dogged in their pursuit of DropShip over the years when the DropShip principals wouldn't take our calls. They knew how to get attractive financing from the debt and equity markets to help me build a big company. And they were by my side negotiating a sale with one of the biggest players in logistics. I can't say enough about their capabilities."
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Spark Networks
- Common Stock Investment
- Recognize Hidden Value
- Sourced CEO and Board Members
"GHP moved quickly to buy a large illiquid block of founders' stock in Spark. In so doing, they became board members who have been instrumental in adding other solid members to the existing Spark board. They have been great partners in helping us... full case study
Spark Networks (AMEX "LOV") owns and operates online dating services including JDate, the leading Jewish dating site. GHP was contacted by an investment bank looking to solve a thorny financial problem for Spark's founders, no longer running the business, who wanted to exercise several million stock options and had only 30 days left to do it. Unfortunately, the company was a British plc trading on the Frankfurt exchange with minimal liquidity. In addition, the company was not reporting any operating earnings. The right sponsor would have to understand the intrinsic value of the business, purchase all common, and get comfortable with a minority position. GHP's knowledge of the sector and efficient diligence allowed for a timely response and a successful transaction. Former Spark CEO, David Siminoff, "GHP moved quickly to buy a large illiquid block of founders' stock in Spark. In so doing, they became board members who have been instrumental in adding other solid members to the existing Spark board. They have been great partners in helping us simplify our complex corporate structure and in being thought partners in helping us develop our strategic intents."