Thoma Bravo Sells Telestream to Allow Exit, Growth Acceleration

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Telestream announced today that Genstar Capital, a private equity firm, has acquired the company. The announcement, according to a Telestream press release, is intended to accelerate business growth for the already-profitable Telestream.

Streaming Media readers may remember a very similarly worded announcement from just over three years ago. In a December 2011 press release, Telestream announced that it had been acquired by Thoma Bravo. The headline read almost exactly the same: "Thoma Bravo to Acquire Telestream to Accelerate Business Growth."

The names have changed, at least when it comes to private equity backing Telestream, but the executive team remains the same. In fact, in both the Thoma Bravo and Genstar deals, the press releases note that "terms of the deal were not disclosed as both companies are privately held," but that the management team in place at Telestream would remain unchanged.

Telestream CEO Dan Castles shed a bit of light on today’s Genstar acquisition press release, which was devoid of any mention of current owner, Thoma Bravo.

"Telestream has grown steadily for Thoma Bravo since the 2011 acquisition," said Castles. "Part of that growth included the purchase of CPC (captioning software) which has proven to be an excellent acquisition for Telestream, adding in-demand features and functionality across the product line."

Castles went on to note that the typical cycle for investment management companies played a bit of a factor in the change of ownership.

"[They tend] to hold companies for 3-5 years and either reap the benefits or not," said Castles, referring to the normal pattern of a private equity firm. "Since we have been profitable for many years and enjoyed a period of rapid growth under their ownership, Thoma Bravo is very happy with the returns they have received during the 3 years we were under their ownership."

The Genstar press release mentioned that the company is interested in taking Telestream to higher revenue and growth models, and Castles said that Genstar has been performing due diligence over an extended period of time.

"Genstar has been following Telestream for some time and is interested in supporting a new growth cycle for us," said Castles. "The media and entertainment industry continues to evolve as platforms and devices expand exponentially. Genstar has said they see even more potential for Telestream to capitalize on these trends and they believe their investment will provide an excellent return on their investment."

Castles stressed that the sale, in and of itself, should not be mistaken for a fire sale or what he called a "distress sale" in which a private equity firm sells off an underperforming company.

"What’s most important to understand is that this sale was not a ‘distress sale’ as we frequently see with companies that have not been profitable for some time," said Castles. "Telestream is quite the opposite, and the vote of confidence that Genstar has given to the Telestream management team further demonstrates that it will be business as usual, with the goal of reaching new milestones for the company."

Genstar’s Eli Weiss reiterated Castle’s comments about due diligence, as part of today’s press release.

"Genstar has been following Telestream closely and this acquisition is consistent with our strategy of investing in vertical market software companies," said Weiss, a managing director of Genstar Capital. "As even more content is generated and viewed on more devices, we believe the company will continue its demonstrated growth trajectory, and we will support Telestream’s experienced and successful management team to expand organic growth via new product releases and pursue add-on acquisitions."

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