The deal is valued at around $265m, and includes $150m of equity. That’s roughly three and half times above the average revenue/price paid in other recent enterprise content management software deals.
Shareholders approved the deal last week and it is expected to close at the end of July.
Thoma Cressey Bravo has offices in Chicago and San Francisco and had earnings of $500m in software investments. The company has invested more than $2bn in equity and has gained a taste for investing in the software, healthcare, and recurring revenue business services industries.
According to Hyland’s CFO Chris Hyland, the private equity firm has agreed to purchase 58% of the shares held by friends and family of Packy Hyland who founded the company in 1991.
Hyland’s senior management will also retain their positions and ownerships stakes in the company. The latter is around 20%. The company also reshuffled its board, adding three new members and letting go of two previous ones.
Hyland said that with Thoma Cressey Bravo’s backing it was in a strong position to buy other companies in the content management space.
We’re going to try to grow as aggressively, and more aggressively than we have been, said Hyland in a statement this week.
Hyland is one of the most celebrated IT success stories in the Cleveland area, and is largest software employer in northern Ohio, employing 625 staff at its Westlake headquarters. Globally, the company employs a total of 675 people.
The company develops an ECM platform suite called OnBase that electronically captures and manages everything from paper reports to Web content.
The company bills OnBase as a modular and rapidly deployable platform consisting of document imaging, workflow, electronic document management, COLD/ERM and records management applications. The software is used by customers in industries ranging from financial services, government, manufacturing, and healthcare.
Hyland was expected to IPO in 2004, but never did. The company has made a couple of acquisitions of its own, most recently a vertical systems integration partner Matrix imaging last September.
Our View
The ECM market continues to shrink as larger infrastructure vendors like IBM, which bought FileNet, Oracle (acquired Stellent), and big ECM players like Open Text (merged with Hummingbird) and EMC Documentum dominate. The acquisition of Hyland is consistent with this trend. It also shows how ECM remains a growth market that is attracting private equity investment. Other small ECM firms to get snapped up include Mobius (by Take-Two) and Zantaz (by Autonomy).
