Irvine-based telecommunications company Horizon Communications Technologies has sold a “significant” ownership stake to Solis Capital Partners LLC, a private equity firm in Newport Beach.
The purchase price and percentage of ownership were undisclosed.
Horizon Chief Executive Mike DeGraw, who bought the company in 2010 after working in the telecom industry for about two decades, said he remains a “significant shareholder” under terms of the deal.
Horizon for several years has provided cabling services for office buildings, including those owned by Newport Beach-based Irvine Company, which is the largest office landlord in Orange County and has acquired substantial holdings in the San Diego and Silicon Valley markets in recent years.
DeGraw brought additional business for Horizon, which now gets a substantial portion of its revenue from installing wireless networks at sports stadiums, as well as designing and building infrastructure for large data centers.
Horizon’s list of past and ongoing projects includes work for Twitter Inc. and Salesforce.com Inc., both based in San Francisco. The company also has worked on the Honda Center in Anaheim and the Chase Field in Phoenix. It’s currently halfway through a project at Dodger Stadium in Los Angeles.
“The stadiums part is about 70% of our business,” DeGraw said. “Data centers are big as well, but just not the sheer size and scope of putting in a network in a 60,000-seat stadium.”
Horizon has annual revenue of about $16.5 million and about 100 employees, according to DeGraw—“big changes” compared with when he bought the struggling company.
“There wasn’t a whole lot going on at the time,” he said. “The company really just had a riser-management contract with the Irvine Company. By riser-management I mean the telecommunications infrastructure that runs vertically in a building. We still value that business and maintain it. But the problem was, in 2008, 2009, nobody was moving.”
DeGraw oversaw a shift in company culture and helped it grow about 50% the first year after he took over.
It helped that he was able to bring in relationships built up from his previous stints. He most recently served as part of executive management at Leucadia National Corp., a New York City-based holding company that operates through its investment banking, energy and telecommunications arms, among others.
DeGraw ran several of Leucadia’s operating companies, including WilTel Communications Group LLC, which was acquired by Broomfield, Colo.-based Level 3 Communications Inc. in 2005 for nearly $800 million. He also launched and managed TeleBarbados Inc., a local phone company in Barbados.
Years of corporate experience and constant travel pushed DeGraw to seek an opportunity to own a business.
“No one believes me when I say this,” DeGraw said, “but I found [Horizon] on Businessesforsale.com. I truly did. It was a long shot.”
It’s worked so far.
DeGraw has led the company to notch consistent double- and triple-digit growths in the past three years, gains that have helped land Horizon on the Business Journal’s list of fastest-growing private companies for each of those years.
That also was a period during which Solis Managing Director Dan Lubeck consulted and kept close watch on Horizon.
“Really, at that point, it was not an investment that we would have pursued,” Lubeck said, referring to the first of his conversations with DeGraw in 2010, when they met through a mutual acquaintance.
Investments
Solis typically invests in companies with between $15 million and $100 million in revenue. Its investments range from $2 million to $20 million.
Horizon’s fast growth over time eventually led Solis to make an investment, although Lubeck said it was “pretty unusual for us to invest in a contractor.”
Acquisitions of contractors tend to be “tougher investments … because there’s no scalable revenue model,” Lubeck said. “But we overcame our bias because of Mike and what he’s been able to do at the company, and the potential we saw. There are going to be companies that will want to buy us, but we’re not in any hurry to sell. We have a lot of things we want to do.”
High on the to-do list is a goal to strengthen Horizon’s foothold in the convergence of sports and information technology, DeGraw said.
Changing Demand
That means being able to cater to the needs of sports venues as they adapt to changing consumer demands.
“What stadiums are wanting to do is create the home-viewing environment while enjoying the live version,” DeGraw said, adding that there are projects in the works that could allow spectators to use their own mobile devices to connect to certain cameras and see their own replays.
Mobile applications that link arena seats to concessions stands also are in development, he said.
“We need Wi-Fi in the picture,” DeGraw said. “It’s where everyone is going. This is a really fascinating industry. Horizon really has a good head start in this space and a good reputation. As technology evolves, stadiums are going to need to augment their networks to adapt. So there’s longevity in our strategy. It’s not just, ‘Let’s get as many as we can in the next year.’ It’s establishing relationships with the teams.”
DeGraw said he’s in conversations with the NBA and MLB.
“This is all very topical for them,” he said. “They all know their clubs really need to have some type of network in place. We [also] have a dialogue going with International Speedway Corp., which owns 11 of the Nascar tracks. If you look at a Daytona event, it holds 120,000 people.”
Mobilitie
Horizon faces competition from the likes of Mobilitie LLC, a Newport Beach-based wireless infrastructure provider.
Mobilitie is among the largest U.S. suppliers of distributed antenna systems for sporting venues.
The Solis investment is expected to help Horizon as it prepares to enter the international market in earnest.
Horizon recently formed a subsidiary in London for a potential opportunity to work on Salesforce.com’s office there.
“In addition to the Salesforce data center, we also have three U.K.-based football clubs that are interested in us installing wireless networks,” DeGraw said. “I’m fairly confident that one, two or more of these opportunities will hit in the near future.”
