Sizing up the deal:
Fibertech Networks, a provider of wholeseale and retail dark and lit fiber services, was sold off by Nautic Partners and Ridgemont Equity Partners to Court Square for $500 million.
What's significant about it?
Led by former Frontier Communications veteran John Scanlon, the sale to Fibertech to Court Square came during a flurry of M&A activity in the competitive fiber provider industry last summer with other fellow fiber providers KDL and Fibernet being acquired by Windstream (Nasdaq: WIN) and NTELOS (Nasdaq: NTLS).
While Fibertech has new owners, the overall look and feel of the service provider remains unchanged.
Unlike other fiber network providers ... Fibertech was actually a profitable endeavor for its former investor Nautic
Joining Purcell will be Fibertech Networks' founder and COO Frank Chiaino, who will remain in his current role along with the rest of the senior management team.
Unlike other fiber network providers that crashed and burned in the late 1990s and early part of this century, Fibertech was actually a profitable endeavor for its former investor Nautic, which owned a 51 percent stake in the company.
That trend continued in 2010. Driven by ongoing sales of dark and lit fiber-based services to carrier (including wireless operators) and enterprise customers, Purcell said at the time it conducted the Court Square deal did reveal that Fibertech was budgeted to be up 30 percent in 2010 revenue.
"When they got to the fifth and seventh year, we were doing very well and we were building both cash and sales traction," Purcell said in an interview with FierceTelecom. "They realized they did not have put any more money in because we could do our own expansion with our own self-generated cash flow and that we had very modest debt so we were rolling into a big payoff for them if they stuck with it until the end and got the big number."
He added that Nautic's timing was "exquisite because in the last year and half a lot of the private equity firms have raised and closed new funds, but only now have put them to work because of deals that were not attractive."
Prior to finalizing the deal with Court Square, Fibertech got 19 possible offers from both private equity firms and various unnamed fiber network providers. After whittling the list of bidders down to a short list of four (two equity firms and two service providers), Fibertech settled on Court Square.
Purcell said the decision to go with the bidder that they thought would "take us to the next level and had the telecom experience, the staying power and the enthusiasm for us and in the end that was Court Square."
Along with retaining its name and private status, one piece of Fibertech's next level will be to expand its fiber network presence in New England (New Hampshire and Maine), the Midwest and Southern states.