Golden Gate Gets Hung Up In Call Center Tech –

Both the software and communications industries have been big sectors of interest among the buyout crowd as of late. Recent players on the software front include Bain Capital, Francisco Partners, Silver Lake Partners, Thoma Cressey Equity Partners and Trident Capital. On the communications side, one can point to Apax Partners, The Blackstone Group, One Equity Partners, Providence Equity Partners and Texas Pacific Group as just a small sample of firms to deal in the space recently.

But while some firms choose to invest in one sector or another – or both separately – Golden Gate Capital, through investing in call-center technologies, has found a way to straddle the fence between software and communications, thus profiting from the simultaneous expansion of both markets. Earlier this month, the San Francisco-based private equity firm made its most recent play in sector, agreeing to the $1 billion acquisition of Aspect Communications Corp. (Nasdaq: ASPT).

Based in San Jose, Calif., Aspect provides inbound call-center software and services, such as inquiry assessment and call routing. The company reported about $370.4 million in net revenues in 2004 and employs approximately 1,254 full-time workers. Once the acquisition is complete, Aspect will be tucked into Concerto Software Inc., a provider of call center services previously taken private by Golden Gate and Oak Investment Partners for $145 million.

The always-evolving technological advances in contact-center software and services, coupled with their necessity to big business, are factors that attracted Golden Gate to the space. “In the past, call-center services were mostly about forwarding customer calls to an available agent to solve any given problem,” said Prescott Ashe, a managing director at Golden Gate. “But as technology advanced, so did call-center software – to the point where today it routes customers not only by agent availability, but also by the agent’s skill set and the customer’s relationship with the business… It’s really the backbone of the business.”

Select users of Aspect’s services include DaimlerChrysler, Goodyear Dunlop Tires Co., Cox Communications, MobileOne Ltd., American Express, Wachovia Corp. and Bayer AG.

Ashe said Golden Gate had been following Aspect ever since it completed the Concerto acquisition in February 2004, noting that the firm jumped at the opportunity as soon as Aspect hired Morgan Stanley earlier this year to review its strategic options.

“There are a number of companies we continue to look at in the space for add-ons. This is not going to be the last deal we do in the sector,” he added.

The customer/agent aspect of call-center solutions is not the only one being persued by Golden Gate. About a month-and-a-half ago, the firm completed the acquisition of Plant Equipment Inc., a provider of communications systems for 9-1-1 and other emergency call centers, such as those used in airports, transportation centers, utility call centers and federal government installations (including military bases) throughout the world.

Debt for the Aspect transaction will take the form of $475 million of senior bank financing led by J.P. Morgan and Deutsche Bank Securities and $250 million of second lien financing led by J.P. Morgan and Lehman Brothers. Golden Gate’s equity investment will come from its Vintage-2004 Golden Gate Capital Fund II, which raised a total of $1.8 billion. Oak Investment is currently investing from Oak Investment Partners XI, which raised about $1.5 billion in 2004.

The deal is expected to close in September, at which point a new name for the combined company will likely be unveiled, Ashe said. Aspect represents Golden Gate’s 28th software acquisition and sixth software public-to-private transaction over the past four years, according to the firm.

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