Monday, April 13, 2009

Entrust Goes Private with Thoma Bravo

This morning former Nortel spinout Entrust announced its agreement to be purchased by Chicago-based Thoma Bravo, a private equity firm that specializes in acquiring and consolidating public and private software companies. It is not yet clear whether Entrust will be the consolidation platform for other Thoma Bravo targets in the security sector, or whether it will be rolled into another TB portfolio company. Entrust has been an Ottawa staple for years and its alumni have gone on to found other companies, including Ottawa's Third Brigade.

This kind of private equity investment makes me happy, as it is based on the theory that value can be built through consolidation (versus the theory that value can be extracted by breaking up the assets of a business and selling them). It's the kind of exit that can give investors and founders some significant upside despite a sterile public market.

Thoma Bravo is not the only PE player nosing around Canadian companies with more than $50 million in sales - stay tuned.