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S.F. Shop To Buy Background Checker

Target: Sterling Infosystems Inc.

Sponsor: Calera Capital

Seller: Generation Partners

Financial Adviser: Seller: William Blair & Co.

Calera Capital is buying a 55 percent stake in Sterling Infosystems Inc., a New York-based company that provides pre-employment screening and background checks, Sterling InfoSystems CEO Bill Greenblatt told Buyouts. The company expects to use the equity infusion to pursue more add-on acquisitions and other growth initiatives.

Greenblatt is selling down his 75 percent stake to 45 percent. Generation Partners, a Greenwich, Conn.-based shop that took a 25 percent stake in the company in 2003 for $9.25 million, is exiting its investment, Greenblatt said.

Greenblatt will relinquish a majority position for the first time since founding the company in 1975, when he was only 19. He will remain CEO and management will remain. “I’m not really giving up control,” he said. “I’m the CEO. [Calera Capital] are investors and they’re betting on us, the same way Generation backed us with a minority deal.”

Sterling Infosystems serves more than 3,000 customers across a variety of industries, including health care, retail, manufacturing and financial services, among others. The company employs 1,100 workers and generates around $130 million in annual revenues, Greenblatt said. Its services include drug testing, criminal screening and employment verification. The company has offices in Denver, Boston, Atlanta, Washington, D.C., Chicago and Mumbai.

Calera Capital’s investment will allow the company to seek more add-on acquisitions. “I’m looking at my board right now and I see 52” potential targets, Greenblatt said in a phone interview. “But we’re seriously looking at six or seven.”

Greenblatt declined to discuss the amount of Calera Capital’s investment. Calera Capital executives did not return requests for comment.

Formerly known as Fremont Capital, Calera Capital invests between $50 million and $250 million in the financial services, business services, food and consumer, health care, building products and industrial manufacturing sectors. The San Francisco and Boston-based firm manages $2.8 billion, according to its Web site.

William Blair & Co advised Greenblatt on the deal. The sale process took about six months, Greenblatt said.