Presidio Investors buys majority of ElevATE Semiconductors

Presidio Investors acquired a majority stake in ElevATE Semiconductors Inc, a designer of analog chips for the automated test equipment industry.

Terms of the deal, which closed in August, weren’t announced.

Sellers include Patrick Sullivan, ElevATE’s co-founder and CEO, and the company itself, according to Chris Puscasiu, a Presidio managing partner. The San Francisco PE firm has a more than 60 percent stake, while Sullivan, and the company, rolled over a minority, Puscasiu said.

“Every employee has an ownership stake in the company,” said Sullivan, who is staying with ElevATE. Of the company’s 15 employees, 14 are staying put and one is retiring, he said.

High demand for consumer electronics, along with increased adoption of system-on-chip, is expected to push the global automated test equipment market to $4.59 billion by 2025, according to Grand View Research.

ElevATE sells chips to all the major automated-test-equipment manufacturers that make up that $4.59 billion market, Sullivan said. He declined to identify any of ElevATE’s customers.

“We have been impressed how ElevATE has become a leader in providing efficient, innovative solutions for some of the world’s leading semiconductor companies,” Puscasiu said in a statement.

Former members of Intersil ATE’s products division, including Sullivan, launched ElevATE in June 2012. The San Diego company provides various products for the ATE market including system-on-a-chip test, memory test, test during burn-in and in-circuit test.

“We design chips that test chips,” said Sullivan, who added that ElevATE is profitable. He declined to specify the company’s sales.

Sullivan said he was looking for a partner to help stabilize ElevATE and grow its business. He hired Palmares Advisors to find a buyer earlier this year.

Now that ElevATE is owned by PE, Sullivan said, he’s still “highly incentivized and motivated” to take on “some of the things I thought about but didn’t have the resources to pursue.”

ElevATE, he said, needs to be big enough to sit inside a bigger company. “My goal is to make it very profitable, continue that growth and continue to provide what our customers need,” Sullivan said.

ElevATE is the second deal from Presidio’s second fund, which is in the market. The San Francisco PE firm is seeking $200 million for Presidio Investors Fund II, a source said.

The pool clinched a first close, less than $70 million, over the summer, the person said.

Presidio acquired Alliant National Title in July, which is Fund II’s first deal. Alliant, Longmont, Colorado, is an independent-agent focused title insurance firm.

Presidio, which also has an office in Austin, targets lower-middle-market companies in business services, consumer services and financial services. It typically seeks to invest in companies with EBITDA of $3 million to $20 million.

Korak Mitra of Palmares advised ElevATE.

Action Item: Contact Patrick Sullivan at +1 858-451-7240