CoSentry Acquired by Private Equity Firm

Private equity firm TA Associates has acquired CoSentry, an Omaha-based provider of outsourced IT infrastructure services, the companies said today. TA partnered with CoSentry management to acquire the company from two Omaha-based investment firms.

Rich Miller

October 27, 2011

3 Min Read
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Private equity firm TA Associates has acquired CoSentry, an Omaha-based provider of colocation and managed hosting services, the companies said today. TA partnered with CoSentry management to acquire the company from two Omaha-based investment firms, McCarthy Capital and WaittCorp Investments. Terms of the deal were not disclosed.

Founded in 2000, CoSentry offers colocation and managed hosting services, with a focus on business continuity and disaster recovery. CoSentry has facilities in Nebraska, Missouri and South Dakota.

"As a profitable and rapidly growing technology company with a seasoned management team, CoSentry is precisely the type of business in which TA seeks to invest," said Harry Taylor, a Principal at TA Associates who will join CoSentry’s board of directors. "CoSentry has been repeatedly recognized as one of the country’s fastest growing Internet infrastructure businesses. We will work closely with management to continue that growth and help realize CoSentry’s full potential."

Founded in 2000, Focused on Midwest

CoSentry was founded in 2000 through a partnership with management and Waitt. In 2006, Waitt recruited Michael Steffan to lead it. Shortly thereafter, Joe Urzendowski joined the management team as Chief Administrative Officer. McCarthy Capital subsequently made an investment in CoSentry in 2008.

Since 2008, CoSentry expanded its three existing data centers, built a new $25 million Tier IV data center in the Omaha market, added a number of managed services, and more than quadrupled its earnings before interest, tax, depreciation, and amortization (EBITDA).

"TA Associates has a well-earned reputation as a successful investor, helping businesses create substantial value for the future," said Steffan, President and CEO of CoSentry. "This partnership is validation of the soundness of our business model and prospects for continued success. With their financial support, experience investing in technology companies, strategic guidance and significant network of contacts, we anticipate a fruitful and mutually beneficial relationship with TA."

TA Associates has more than four decades of investing experience, focusing on profitable growth companies. TA’s prior investments in the telecommunications and software sectors include AboveNet, IntraLinks, McAfee, MetroPCS Communications, NetScout Systems, Network Appliance, Sophos Plc and WIND Telecom S.p.A.

Second Industry Exit for McCarthy

"McCarthy Capital has enjoyed its partnership with CoSentry," said Patrick Duffy, Partner at McCarthy Capital and former CoSentry Board Member. “It has been a great and meaningful experience for us to support and enhance CoSentry management's vision to grow the business from a local operation into a nationally recognized company. We wish the management team and company continued success."

This was McCarthy Capital’s second successful  exit from an investment in the data center and managed services industry. In 2010, McCarthy exited an investment in Peak 10, Inc., a Charlotte-based operator of data center facilities in 10 markets.

“It’s been a pleasure working with such a terrific group of people. I’m proud of what this partnership has been able to accomplish over the past 12 years and grateful for the contributions of many along the way,” said John Schuele, President of Waitt and CoSentry Board Member. “This is a tremendous achievement for a local company as numerous jobs were created here and many of the employees were owners.”

“CoSentry management is very grateful for the partnership approach of McCarthy and Waitt,” said Steffan. “They provided equity capital when we needed it and more importantly they added tremendous value through their expertise, resources and relationships.”

The current management team will continue to operate CoSentry and has retained a material ownership interest in the company. Signal Hill Capital Group LLC initiated this transaction and provided financial advisory services to CoSentry and Koley Jessen P.C., LLO served as legal counsel to CoSentry. Goodwin Procter LLP provided legal counsel to TA Associates.

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