Case Study: Latisys

Explore this investment 02.23.15

Fast Facts

  • Co-Founded Company with EIR
  • Industry Knowledge / Long-Term GHP Initiative
  • Platform for Consolidating Acquisitions
  • Sourced Financing

In 2007, businessman Pete Stevenson was seeking an investment partner to establish a platform in the data center sector. Concurrently, we had been studying the sector and evaluating various entry strategies as well.

Although there were signs that the sector had recovered from a difficult period when the Internet bubble burst, many investors were still unsure about the data center sector. Our proprietary research suggested that the supply/demand imbalance had been corrected, and the sector was poised for healthy growth as companies sought to outsource their IT infrastructure.

Since both we and Pete shared the same view of the industry, we established a partnership to seek out acquisition candidates that would serve as the core of the company. Pete said, “Although I had met dozens of investment firms, Great Hill clearly had done their homework and was the most knowledgeable investor in the industry that I had encountered.

Working closely with the Great Hill Partners team, Pete and his team quickly signed up two acquisitions in Irvine, CA and Denver, CO that would serve as the initial platform for Latisys. With significant support from GHP on the diligence and introductions to a number of GHP lending relationships, the initial data center acquisitions were closed in late 2007.

In evaluating strategic next steps for the business, we encouraged the management team to proactively identify the markets they wanted to enter and then pursue follow-on deals. Despite an unsettled deal market, the management team was able to consummate additional acquisitions in the summer of 2008 in Chicago, and in the spring of 2010 in Virginia, increasing the company’s market presence, data center inventory and growth prospects. In each instance, the GHP team worked closely with management on diligence, negotiations, and financing.

As the execution on the corporate development strategy progressed, both we and Pete wanted to build a best-in-class sales and marketing organization, which we all agreed was critical to our long-term success. As we worked with the management team to refine the strategy, we encouraged the team to engage one of our consulting relationships to integrate the strategy with the implementation of a go-to-market framework and, which proved to be an invaluable tool for the senior team.

Latisys was sold to Zayo Group Holdings, Inc. (NYSE: ZAYO) in early 2015 for $675 million. Looking back, Pete commented, “Great Hill’s perspective, company-building experience and sector knowledge have been an invaluable source of guidance and support to our team as we grew Latisys into the leading independent data center company.