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Rare Investment Method Behind MTAB Acquisition

Poplar Capital Partners LLC’s recent buy of Yorba Linda-based business software maker mTAB LLC was backed through a rarely used investment mechanism: a search fund.

A search fund typically involves a small group of investors—in this case several of Alex Gelman’s former professors at Stanford University—who kick in between $300,000 and $700,000 that’s essentially used to find and analyze a target company to acquire. The initial round of backing covers related expenses and the hire of an executive, usually the initiator of the fund.

A typical search fund acquires a company for about five times its operating income, usually in the neighborhood of $1.5 million to $4.5 million. The mTAB buy was estimated in the $15 million range.

Poplar Capital partnered with search fund managers Pacific Lake Partners in Boston and Anacapa Partners in San Mateo on the deal.

MTAB has more than 100 customers that use its software, which analyzes customer survey data and delivers the information via the Web. Big clients include Ford, GAP, Taco Bell, Liberty Mutual and JD Power.

“People call us when their survey data is messy and complicated,” said Gelman, who runs Poplar Capital and now serves as mTAB’s chief executive.

MTAB isn’t the only local example of a search fund purchase.

Earlier this year, Washington D.C.-based District Line Partners acquired Planet DDS in Irvine with a search fund. The company, which makes cloud-based software for dental practice management, was ranked No. 24 on this year’s list of the fastest-growing small private companies based in Orange County. Its revenue jumped 93% over the past two years to $5.8 million.

OC Ups Mobility

Orange County late last month became the first market in Southern California to receive extended range LTE coverage from T-Mobile USA Inc., which is on a big hiring push here.

The Bellevue, Wash.-based company’s new spectrum, which is billed as carrying an LTE signal twice as far from towers and performing four times better inside buildings, is now available in Anaheim, Buena Park, Costa Mesa, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, Laguna Niguel, Lake Forest, Mission Viejo, Newport Beach, Orange, San Clemente, Santa Ana, Tustin, Westminster and Yorba Linda.

“It’s a very big market for us and a growth market for us,” said T-Mobile Southwest Area Vice President Sam Sindha. “We wanted to make sure (that) where we wanted to have the growth, we have the fastest and most reliable network.”

T-Mobile is OC’s fourth largest telecom, with 880 employees after adding 220 in about the past year.

Bits & Pieces

Trade group CleanTech OC will host its sixth annual CleanTech OC Conference and Expo Oct. 6 at its new digs at the Institute for Innovation at the University of California-Irvine. … OC residents and eSporters Eugene “Pobelter” Park and Yiliang “DoubleLift” Peng are competing in Berlin this week in the League of Legends World Finals. The duo is part of American team Counter Logic Gaming, which is vying for a piece of the $2.1 million purse. The multiweek video game tournament attracted more than 27 million viewers across various platforms last year, surpassing the average U.S. single-game viewerships for the 2014 World Series, NBA Finals and World Cup.

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