HelpSystems Acquired By Private Equity Giant H.I.G. Capital
August 31, 2015 Alex Woodie
HelpSystems is set to be acquired by H.I.G. Capital, a Florida-based private equity and alternative assets investment firm with more than $19 billion in assets. Terms of the deal, which is not yet finalized and is subject to regulatory approval, were not disclosed. It will be the fourth sale in 10 years of HelpSystems, the Minnesota software company that has since become the biggest provider of systems management tools and utilities for the IBM i server.
So who is the company now behind HelpSystems, which has grown its influence over the IBM i market following a long string of acquisitions? Transparency is not generally the strongest suit of private equity firms, which typically invest private money in private companies and aren’t required to make public disclosures about what exactly they’re doing.
IT Jungle‘s requests for comment from H.I.G. about the HelpSystems deal went unanswered by this publication’s deadline. But based on the information that is available, as well as responses to questions by HelpSystems’ CEO, we’ve done our best to assemble a picture of H.I.G. Perhaps most importantly, nothing stands out as especially unusual.
The Not-So Notorious H.I.G.
H.I.G. Capital has invested in and managed more than 200 companies worldwide since it was founded in 1993. The co-founders and co-CEOs are Sami Mnaymne, formerly a managing director with the Blackstone Group, and Tony Tamer, who was a partner at Bain & Company.
The Miami-based firm specializes in providing both debt and equity capital to small and mid-sized companies. Its various equity funds invest in “management buyouts, recapitalizations and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses.” H.I.G.’s portfolio currently has more than 100 companies, with a combined sales figure north of $30 billion.
The company employs about 250 people in offices around the world, including the two San Francisco-based investors who oversaw the HelpSystems transaction: Fraser Preston, a managing director with the H.I.G. Capital; and Aaron Tolson, a principal with Middle Market Fund of H.I.G. Capital. Tolson, it’s worth adding, spent time at Summit Partners, the private equity firm that is selling HelpSystems LLC to H.I.G.
Over the years, HIG has had stakes in a diverse array of companies, including the Hooters restaurant chain, an Irish hospital, a Spanish warehouse, a Georgia carpet manufacturer, a Dutch preschool, a California salad packager, and an Alabama chicken processor.
H.I.G. and its various subsidiaries have invested in a handful of companies in the IT industry over the years, including Infogix, an Illinois developer of data accuracy software; Intellius, a Washington provider of consumer data solutions; and Milestone Technologies, a California developer of help desk software. None of H.I.G.’s investments appear to have a direct connection to the IBM i software market. (In its press release announcing the deal, H.I.G. misspelled the name of the platform as “IBM-i.”)
Fresh Ideas, Lower Prices
HelpSystems CEO Chris Heim says the company’s prior owner, Summit Partners, was not looking to sell, but was approach by several investors. “We liked H.I.G. and had shared philosophies about taking care of employees and customers so elected to accept their offer,” he says in a written response to IT Jungle‘s questions. “H.I.G. has a long term horizon on this investment and is committed to providing additional resources that will enable us to continue to grow.”
Some things will stay the same under the new owners, while others will change, Heim says. “What will stay the same are the people supporting the software and the investment we make in support and product development,” he writes. “We have increased this investment this year and have a shared plan with H.I.G. to increase it further every year in the future.”
There will not be any layoffs as a result of the ownership change, Heim says. In fact, the company is “hiring aggressively” and currently has 12 open positions. But there will be changes in management. Heim says the company has already brought in new managers, which has given the company “a nice mix between experienced managers that know the business extremely well and new managers that are bringing fresh ideas.”
Customers might be interested to hear about one area that will change: pricing. “We are looking to â€¦ better align pricing with the technology changes IBM has introduced and this will be great news for customers,” Heim says. This will be quite a change for a company that’s become known for Cadillac-level products, but also Cadillac-level prices.
More Acquisitions To Come
Heim says H.I.G. is on board with HelpSystems’ strategy to grow through acquisitions. “Our customers are looking for expanded solutions in many areas,” the CEO says. “We are delivering some of those through internal development and for others it will make more sense to buy. Our goal is to have the broadest and best solution set for the IBM i market.”
When the deal goes through–not if, because the odds of the deal gaining antitrust attention from regulators are infinitesimally small–it will be the second time that Summit Partners has sold HelpSystems to a fellow equity firm.
Summit originally bought the company in 2005, and then turned around and sold it two years later to Boston-based equity firm Audax Group. Then in the spring of 2012, Audax sold the company back to Summit Partners, which held the company until it recently agreed to sell it to H.I.G.
HelpSystems did its first acquisition, buying Advanced Systems Concepts under Summit, but the buying spree ratcheted up under Audax, which financed a deal for IBM i security software vendor PowerTech in August 2008 and quickly following that up with a deal to take over security and management tool maker Bytware in October 2008.
Since then HelpSystems has made more than 10 more acquisitions, including (in reverse chronological order):
HelpSystems got its start back in 1982 when it was founded by Dick Jacobson, who created the first Robot/38 product. Today the company counts more than 9,000 customers, the majority of which are IBM i shops.
H.I.G’s Preston sounds eager to get started with his new company. “We are excited to partner with Chris Heim, Dan Mayleben, and the entire HelpSystems team to continue the company’s strong growth,” Preston says in a press release. “We look forward to working together with the management team to expand HelpSystems’ suite of products and to continue to provide best-in-class service to HelpSystems’ customers.”