The events of Sept. 11th made it clear that saving data on a back up system is important, but that disaster also pointed out that backing up systems in a different location is a good idea.
Thus, Generation Partners recently acquired IT Solution’s Disaster Recovery Services (DRS) for less than $100 million. Generation Partners is a $325 million private investment firm that does both private equity and buyout deals, primarily in the technology sector.
GE Capital had acquired DRS – which delivers data to a pre-determined configuration of computers, servers and other hardware at designated recovery sites within 12 to 48 hours of a disaster declaration – from its entrepreneur founders in 1993. And according to Toronto-based DRS, it has achieved a 100% recovery success rate thus far.
“GE decided it wanted to sell in eight weeks. It was a strategic plan for them. The division made them billions but it was not in their focus or core business. It hit home that they could sell this and it wouldn’t even effect their stock price,” said Mark Jennings, a managing general partner at Generation Partners. “It was quite easy to convince them we were the logical partner because of our solid reputation and because we were able to get a lender quickly.”
To quickly secure the debt portion of the transaction, Jennings drew on a relationship with an old school chum that heads up the leverage lending department at HSBC.
With the transaction completed, Greenwich, Conn.-based Generation Partners is looking forward to growing DRS internally at a rapid pace. Currently the system has more than 1,000 customers but that is likely to increase, especially because “in recent months many companies have placed a higher priority on the need to develop capabilities to respond quickly to events that can interrupt vital operations and computer access,” Jennings said.
Additionally, Jennings said Generation Partner plans to hold DRS for a while. “We normally get out of something in five years but this is key for us because it is a technology buyout. We’re going to focus on this,” he said.
Founded in 1996, Generation Partners has raised two funds. Both closed with $160 million. While the second one has about 75% of dry powder left, its first fund is fully invested, half in private equity and half in buyouts. Some of Generation’s portfolio companies include Hotjobs, Promatory Communications and American Cellular Corp.
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