New State Closes Second August Platform

New State Capital Partners has acquired Computer Data Source (CDS), a provider of third-party maintenance services to enterprise-level data centers.

CDS is a provider of data center hardware maintenance and support for high-end storage and service equipment. CDS’ services include network and server maintenance, parts and logistics, decommissioning and secure data deletion, IT asset recovery and recycling, installation, implementation, support, training and data center administration services. The company, founded in 1990, is headquartered in Eatontown, NJ with additional offices in Markham, ON; Basingstoke, UK; Frankfurt, Germany; and Melbourne, Australia (www.cds.net).

“For several years, we have been pursuing an investment thesis around IT life-cycle management, including third-party maintenance,” said John Beauclair, a senior principal at New State. “After evaluating numerous opportunities in the space, we found all of the elements that we were looking for in CDS. They work with small and medium-sized businesses through Fortune 100 companies, helping them manage high-end storage needs while building strong relationships that deliver monthly recurring revenue. We look forward to growing and diversifying CDS’ service offerings and customer base through both organic opportunities and acquisitions. New State’s deep roster of executives and ability to deploy capital strategically allows us to fully support these growth initiatives.”

The members of CDS’ senior management team, including Jim McDivitt, chief technology officer; Tom Vaisanen, chief sales officer; John Hlinka, chief solutions officer; and Michael McKee, chief financial officer, have invested in the company and will remain in their current positions. Ron Wollner, CDS’ co-founder, has maintained an equity stake and will remain as a senior advisor to the board of directors.

“CDS boasts an industry-leading senior management team with an average of 25 years of experience and a proven track record of strong execution, even through diverse economic conditions,” added Steve Larned, a senior principal of New State. “They’re supported by fully trained engineers with the same qualifications held by their counterparts at the OEMs. With global service capabilities and more than 500 contracts, CDS is customer-service focused and OEM neutral. Their customers have expressed great confidence in CDS’ technical capabilities and service delivery.”  Mr. Larned will assume the position of Interim CEO for CDS while a new leader for the business is identified.

New State invests from $10 million to $50 million of equity in companies with $8 million to $30 million of EBITDA that are active in the business services, healthcare services and industrial sectors. New State closed its second fund, New State Capital Partners II LP, in 2018 with $255 million in capital. The firm was founded in 2013 and is headquartered in Larchmont, NY (www.newstatecp.com).

Debt financing for this acquisition was provided by Crystal Financial and debt placement advisory services were provided by Piper Jaffray & Co.

The buy of CDS is New State’s third platform investment in the last ten months.  Earlier this month, New State acquired Mako Steel, a Carlsbad, CA-based provider of construction services to the self-storage industry (www.makosteel.com).

© 2019 Private Equity Professional | August 30, 2019

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