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PE Firms Come Calling With $150M Buyout Deal For Cydcor

Dow Jones LBO Wire

2/16/2007 – Two firms founded by Bain Capital alumni, Golden Gate Capital and JP Capital Partners LLC, have teamed up to buy Cydcor Inc., a company that does face-to-face sales calls for corporate clients, for a price tag of $150 million, a person familiar with the matter said.

The purchase price is 6.25 times Cydcor's annual earnings before interest, taxes, depreciation and amortization of $24 million, this person said.

The two firms are buying the company in conjunction with Cydcor's chief executive, Gary Polson, and its senior vice president of business development, Jim Majeski, and hope to expand its presence in the U.S. and internationally.

Cydcor, of Westlake Village, Calif., has a network of more than 180 sales offices and about 2,400 sales representatives that do cold calls to businesses trying to sell products and services on behalf of clients.

Past clients have included AT&T Inc., Stamps.com, Rogers Communications and Staples Inc. unit Quills, according to Cydcor's Web site.

The company's sales are based on commissions, so it doesn't cost its customers anything until Cydcor representatives complete a sale, making it a low-risk option to generate more business.  Cydcor's sales representatives also typically reach clients that are difficult to reach through traditional advertising.

Cydcor's new owners will look to get the company new sales contracts with blue-chip clients and expand the company beyond its current operations in the U.S. and Canada, according to a release announcing the sale.

The deal is a reunion of sorts for the two private equity buyers, as both are headed by former managing directors at Boston buyout firm Bain Capital.

Golden Gate Capital, of San Francisco, traces its roots back slightly further, having been founded in 2001 by long-time Bain partners David Dominick, Jesse Rogers and Prescott Ashe.  The firm is currently investing out of the $1.8 billion Golden Gate Capital Fund II LP, raised in 2004.

JP Capital, meanwhile, was founded in 2003 by Joe Pretlow, who spent about a decade at Bain.  The Los Angeles-based firm currently has about $100 million of capital committed from individuals and institutions, having put [a significant portion of that to work], Pretlow said.  (sic)

Executives at Golden Gate Capital were not available for comment, while a spokeswoman for Cydcor did not return a call.

The debt-package for the Cydcor buyout was led by Credit Suisse.

Reach Golden Gate Capital at 415-627-4500; JP Capital Partners at 310-691-1700.