HIG Capital starts sale process for Trace3

First-round bids are due mid-June for the Irvine, California-based IT services provider.

Four years into its investment, HIG Capital has kicked off a sale process for IT services provider Trace3, sources familiar with the matter told PE Hub.

The firm hired Guggenheim Partners to provide financial advice on the sale process, which is currently in its early stages, they said. First-round bids are due mid-June, the people familiar said.

Trace3, based in Irvine, California, is a digital transformation and IT solutions provider to medium- and large-sized enterprise clients. Trace3, founded in 2002 by Hayes Drumwright as a value-added reseller (VAR), creates customized solutions to address all aspects of a client’s technology roadmap, whether that’s security, big data intelligence, DevOps, or cloud services. The company, led by CEO Rich Fennessy, has additional offices in in the Bay Area, Los Angeles, San Diego, Boise, Salt Lake City, Denver, Phoenix and New Jersey.

Trace3 generates around $100 million in EBITDA, the sources said.

HIG invested in the IT provider in June 2017 and has since grown the business through a few add-on acquisitions.

In August 2017, Trace3 announced it was merging with Data Strategy, another IT company owned by HIG. The combined company reportedly generated $1 billion in revenue at that time.

In November 2020, Trace3 acquired Groupware Technology, a data center infrastructure and cloud computing provider, expanding its market position in Northern California and Arizona.

HIG, based in Miami, is a global alternative investment firm with $44 billion of equity capital under management. HIG Private Equity funds focus on leveraged buyouts and recapitalizations, including corporate divestitures and take-private transactions, typically in partnership with existing management in small- and mid-sized companies.

HIG has been both an active buyer and seller this year. In other recent activity, the firm agreed to acquire CORA Health Services from Gryphon Investors in a deal valuing the physical therapy platform north of $500 million, PE Hub reported earlier this week.

HIG Capital and Guggenheim Partners declined to comment. Trace3 did not return PE Hub’s request for comment.