Golden Gate To Build Call-Center Empire –

SnapShot

Target: CML Emergency Services Inc.

Buyer: Golden Gate Capital

Seller: Apax Partners

Legal Counsel: Buyer: Kirkland & Ellis LLP

Private equity firm Golden Gate Capital is making leaps and bounds in the call-center solutions space, an industry relatively devoid of other private equity players. Late last month, the San Francisco-based buyout shop agreed to acquire CML Emergency Services Inc., a provider of emergency communications systems, in a transaction scheduled to close sometime before year-end.

Once the acquisition is completed, CML will be the third call-center solutions deal that Golden Gate has closed in the past seven months, following the May recapitalization of Plant Equipment Inc. for an undisclosed amount and the September buyout of Aspect Communications Corp. for about $1 billion.

Gatineau, Quebec-headquartered CML provides communications management and response systems for the public safety and private security industries. More specifically, the company provides communications routing, switching and call management hardware and software, as well as radio communication consoles, all of which have become increasingly more technical due to the ongoing digitalization of the telecommunications industry.

CML will be merged with the aforementioned Plant Equipment, a provider of mission-critical communications systems to emergency response contact centers. “This merger consolidates the resources of the two most respected and successful companies in the public safety space,” said David Dominik, a managing director at Golden Gate.

To date, more than 1,200 public safety answering point sites across North and South America, Europe and the Caribbean make use of CML’s products and services. Plant Equipment, meanwhile, has more than 2,400 public safety call center installations in 44 states in the U.S., and provides its services to companies like Motorola, Qwest, SBC, Sprint and Verizon. Together, the combined company will be the world’s leading vendor of emergency response management solutions, with an installed base comprising more than two-thirds of the U.S. public safety market, according to Golden Gate.

“Plant Equipment and CML have complementary technologies, product lines and distribution channels; in addition, the new company will possess the most experienced support, services, and engineering teams in the industry,” Dominik said.

Indeed, as technology continues to evolve, call centers such as Plant Equipment and CML see more demand for digitalization, which is a major driver for growth opportunities in the sector. In addition, the now-commonplace use of cell phones and voice-over Internet protocol has raised the bar for updating call routing systems and global position satellite tracking.

Plant Equipment President and CEO Timothy Fuller will continue as CEO following the merger. Steve Panyko, the current CEO of CML, is slated to serve as COO of the new company.

To facilitate the investment, Golden Gate is making use of its $1.85 billion Golden Gate Capital Fund II, which closed in 2004. In all, Golden Gate has approximately $2.6 billion of capital under management.

The selling party on this deal was private equity firm Apax Partners, which originally invested in CML though Patricof & Co. Ventures Inc., its venture arm. In 1999, Patricof led a $30 million investment to create CML as a holding company established to merge two companies in the emergency response and public safety industries-CML Technologies Inc. and Emergency Services Integrators LLC-to form a full-service solutions provider.

Considering that Golden Gate acquired two platform companies in the call-center arena just this year, it is likely that the firm will make more deals in the sector in the coming years. Further more, Golden Gate has yet to make an add-on acquisition for Aspect Communications, the provider of inbound call-center software and services that the firm acquired less than three months ago.