April 24, 2013

SoftChoice Goes Private

On April 23, 2013, SoftChoice Corp. (TSX: SO) announced that it had entered into an agreement to be taken private by Birch Hill Equity Partners. With over 1,200 employees, SoftChoice is a comprehensive reseller of hardware and software, and also provides a range of IT infrastructure related consulting services. The company’s clients include thousands of corporate and public sector organizations across the United States and Canada.

The deal was struck at CAD $20/share representing a total enterprise value of CAD $320 million. The purchase price represents a 24% premium to the prior day’s closing price. From a valuation perspective, the deal was done at 0.3x LTM revenue and 6.0x LTM EBITDA.

The timing of the deal is interesting as earlier this month, private equity backed CompuCom Systems ($2.3 billion of revenue) announced that it was being acquired by Thomas H. Lee Partners for a reported $1.1 billion, representing 0.5x revenue. We expect to see continued activity from private equity firms across the IT resale and services spectrum.