Target: Custom House Ltd
Price: $370 million
Sponsor: Western Union Co.
Seller: Great Hill Partners, Peter Gustavson
Financial Adviser: Sponsor: JP Morgan Securities; Seller: Financial Technology Partners
Seller: Goodwin Procter LLP, Fillmore Riley LLP
The Boston-based shop committed $50 million in February 2006 to Custom House in exchange for a substantial minority stake. Mark Taber, a partner at the mid-market firm, told Buyouts the majority of that amount was invested. Great Hill expects to a return of 4x on its invested capital if the sale goes through, according to an early draft of a press release from Financial Technology Partners, an advisor to Custom House and Great Hill, that was obtained by Buyouts. Taber declined to comment on the anticipated return. The deal is expected to close in the third quarter.
Victoria, British Columbia-based Custom House helps manage accounting and payments for companies that conduct business in which foreign currencies are regularly exchanged. Great Hill was not actively shopping Custom House, though Western Union and other corporations had repeatedly expressed interest in the company, Taber said. Peter Gustavson, the chairman who founded Custom House in 1992, is retiring from the company.
Great Hill’s investment allowed the company to double its sales force, from around 40 to 80 people. The firm also invested in the company’s Internet capabilities, and in 2007 brought in Peter Ciceri, an executive with 25 years experience in the technology industry, to serve as CEO and president. A former executive at large corporations like Compaq, Ciceri’s insights were crucial in helping the company expand, Taber said. The company’s revenue has grown more than 20 percent annually since Great Hill’s investment, Taber said. According to a Western Union press release, the company is on track to generate $100 million in revenue this year.
For Great Hill, Custom House would be the first investment and exit out of
Great Hill typically invests between $50 million and $150 million per transaction, which can include late-stage investments, minority investments, private investment in public equities, and buyouts. Sectors of interest include business, financial, and consumer services, as well as health care, media and communications.