Target: TEOCO Corp.
Price: $60 million
Sponsor: TA Associates
Seller: TEOCO Corp.
Legal Adviser: Sponsor: Goodwin Procter LLP ; Seller: Venable LLP
TA Associates, the Boston-based buyout and growth-equity shop, has topped off its recent flurry of deal-making activity with a $60 million investment in a software services company that it plans to expand through acquisitions.
The investment gives TA Associates an undisclosed minority stake in TEOCO Corp., a Fairfax, Va.-based company that helps communications companies more efficiently track their costs and manage revenue. The profitable company needed outside capital in part to make acquisitions, a profile that put it in the wheelhouse of TA Associates’s growth equity approach.
For TA Associates, the deal marks a stunning fourth investment in three weeks. On Sept. 18, the firm agreed to buy Vatterott Educational Centers Inc., a St. Louis, Mo.-based post-secondary trade school, from fellow buyout shop Wellspring Capital Management. On Sept. 28 it made a minority investment in Dealer Tire LLC, a Cleveland-based company that helps car dealers sell replacement tires and parts to service customers. And on Sept. 30 the firm paid more than $200 million for a minority interest in AVG Technologies, an Amsterdam-based company that makes security software. That makes a total of five investments for TA Associates in 2009; this May it invested more than $50 million in Fotolia LLC, a New York-based company that operates an online catalogue of stock photography.
The burst of deals is partly a coincidence, but it also reflects the growing confidence within TA Associates that the economic environment is improving, Brian Conway, a managing director at the firm, told Buyouts.
TA Associates remains well behind its usual pace of investing in 10 to 12 companies per year. “On one hand, because of the recession our investment pace is way off—that’s expected when you’re investing in growth companies,” Conway said. “That said, I think 2009 is a much better investment environment than 2008 or even 2007 in hindsight.” Added Conway: “If they have the wind at their back now, in a strong economy they’re really going to do well.”
Equity for the TEOCO deal came from the $1.7 billion TA Atlantic & Pacific VI LP fund, and from TA X LP, which closed on $3.5 billion in 2006 and is now nearing the end of its investment period. The firm doesn’t expect to make its first investment from TA XI LP, the $4 billion fund closed in August, until first quarter 2010.
Correction: An earlier version of this story incorrectly stated AVG Technologies was based in the Czech Republic.