Tag: SunGard

DataBank expands to the Twin Cities

Ben Kolada

Contact: Ben Kolada

Dallas-based DataBank has expanded beyond its Texan roots, acquiring Minneapolis-based VeriSpace. The deal is part of a growth strategy aimed at entering new markets in part through M&A. With VeriSpace, DataBank now operates eight datacenters with more than 180,000 square feet of datacenter space. DataBank was acquired by Avista Capital Partners in June 2011.

VeriSpace provides server colocation, managed hosting and disaster recovery services to enterprises. The company operates a 10,000-square-foot facility in Minneapolis suburb Eden Prairie. VeriSpace was founded in 2002 by Minnesota commercial real estate developer Dave Frauenshuh, and sits in a commercial office complex located about 12 miles south of downtown Minneapolis.

The greater Minneapolis-St. Paul metro area has seen a little bit of moving and shaking in the past few years. In May last year, Cologix picked up Minnesota Gateway and in March 2010, TDS bought VISI for $18m. In Minneapolis, competitors in the colocation market include XO Communications, VISI, Atomic Data, Cologix and Implex. Competition in the interconnection services area will most likely come from SunGard, Velocity Telephone and zColo.

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Buyout blues

Brenon Daly

Three years ago, the buyout barons shook up the technology M&A market with the $11.3bn LBO of services giant SunGard. At the time it was the largest tech buyout, equaling basically half the money spent on all LBOs in the previous year. Even as financial acquirers became more active – increasingly their spending sevenfold from 2004-07 – the SunGard buyout stood as the third-largest tech LBO.

SunGard’s brozen-medal placing seemed unlikely to hold at this time last year. There seemed to be a new multibillion-dollar LBO every week, with the targets getting bigger in every transaction. (Remember the half-serious speculation that Microsoft could be taken private?) All that changed in late summer, when debt became more expensive, sending the LBO market into a funk from which it hasn’t recovered. So far this year, LBO firms have announced 49 deals worth $10.3bn, down from 59 deals worth $97bn in the same period last year, according to The 451 Group’s M&A KnowledgeBase.

The change in climate isn’t lost on the financial deal-makers. Underscoring the difficulties in the current credit market, SilverLake’s Alan Austin said at the recent IBF VC Investing Conference in San Francisco that his firm couldn’t pull off a deal like SunGard right now. The buyout firm put in $3bn of equity and borrowed the remaining $8bn. ‘We could never do something like that today – never mind the terms (of the debt)’, Austin said at the conference.

PE deal flow

Period Deal volume Deal value
Jan. – June 2008 51 $11bn
Jan. – June 2007 59 $97bn
Jan. – June 2006  35  $17bn
Jan. – June 2005 25 $24bn

Source: The 451 M&A KnowledgeBase