Transcoding and workflow vendor Telestream announced that it has entered into a definitive agreement to be acquired by Genstar Capital, a San Francisco-based private equity firm that manages funds with total capital commitments of over $3 billion and targets investments focused on selected sectors within the financial services, software, industrial technology, and healthcare industries.
Terms were not disclosed, but Telestream said that “the transaction recognizes the company’s significant growth and positions it well for the next phase of expansion.”
The deal comes just four months after Telestream issued a statement saying that its transcoding and workflow revenue increased by 40 percent in 2013 versus 2012, and had achieved profitable growth for the last 14 years. At that time, company CEO Dan Castles attributed the company’s impressive track-record of growth to both innovation and management stability.
Telestream will continue to operate as an independent entity, and its existing management team will continue with the company in their current roles.
Thoma Bravo said in a statement that since it bought the company, Telestream saw “incredible growth on several fronts,” thanks to new product launches, strategic M&A, and expanding its executive and sales team to drive further growth. “Thoma Bravo worked in partnership with management over our three year ownership period to invest in the business, make acquisitions and accelerate the company’s growth,” said Holden Spaht, a managing partner at Thoma Bravo. “The company today is a clear leader in the digital video space with the deepest set of products and services in the market.”
Castles issued an upbeat statement about the deal, and telegraphed he believes that under Genstar, Telestream might continue to use strategic M&A and become an industry consolidator.
“Genstar’s mid-market focus and deep expertise in the software industry will enable Telestream to further accelerate our growth,” said Castles. “Over the past several years, Telestream has experienced its most significant growth. We look forward to our new partnership with Genstar as we increase our investment in existing products, accelerate our reach into new customer verticals and fuel our next phase of development through additional M&A activity. Our product portfolio and business models are well suited for the Genstar environment.”
“Genstar has been following Telestream closely and this acquisition is consistent with our strategy of investing in vertical market software companies,” said Eli Weiss, a Managing Director of Genstar. Telestream is a leader in its market and has posted profitable growth since its founding. As even more content is generated and viewed on more devices, we believe the company will continue its demonstrated growth trajectory, and we will support Telestream’s experienced and successful management team to expand organic growth via new product releases and pursue add-on acquisitions.”
The deal is expected to close in mid-January 2015.
Genstar’s acquisition of Telestream is the latest in a series of deals related to online video and transcoding.
As broadcasters and media companies scramble to deploy multi-screen services, transcoding is seen by many as a key technology. As a result, transcoding has also attracted its fair share of financing and M&A activity. Here’s a quick run-down of some of the recent transcoding deals and related-financial news:
- In December 2014, Elemental Technologies announced that it has closed a $15m series D funding round, led by led by Australian telco giant, Telstra, who in August 2014 acquired online video platform provider Ooyala for $360m
- In September 2014, Telestream announced that its transcoding and workflow revenue increased by 40 percent in 2013 versus 2012
- In April 2014, Imagine Communications acquired Digital Rapids for an undisclosed amount
- In April 2014, Dalet acquired Amberfin for an undisclosed amount
- In January 2013, Amazon unveiled its “Amazon Elastic Transcoder.” Based on the company’s Amazon Web Services (AWS) cloud computing platform, the Elastic Transcoder the service provides “a highly scalable, easy to use and a cost-effective way for developers and businesses to transcode video files from their source format into versions that will playback on devices like smartphones, tablets and PCs.”
- In August 2012 Brightcove bought Zencoder, a 2-year old start-up with $2m in revenue for $30m, and subsequently launched a cloud based transcoding service at IBC 2012
- In May 2012, Elemental Technologies closed a $13m fundraising round led by Norwest Venture Partners (NVP), which brought the total amount of funding raised by Elemental to just under $30m.
- In April 2012, audio processing specialist Wohler bought transcoding provider RadiantGrid in a move that the company said will accelerate its move into file-based operations
- In February 2012, Elemental Technologies disclosed that its revenue in 2012 had doubled to $21m thanks to high demand for its transcoding technology
- Envivio had an initial public offering led by Goldman Sachs
- Envivio closed a $16.5m funding round in January 2012, bringing the total raised to $95.1m
- PE firm Thoma Bravo bought out Telestream in December 2011
- Telestream bought fellow transcoding vendor Anystream in September 2011
- Cisco bought Inlet Technologies for $95m in February 2011
- Elemental Technologies closed a $7.5m fundraising round in 2010, bringing the total raised to more than $14m
- RGB Networks bought transcoding vendor Ripcode in 2010
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