Private equity’s love of music tech continues, as STG acquires Pro Tools maker Avid for $1.4bn

A couple of weeks ago, we wrote about private equity’s interest in the music technology space, and looked at a few of the music tech companies backed by well-funded PE firms.

Now, one of the world’s most prominent makers of professional music-making software is being acquired in a deal worth $1.4 billion.

Avid Technology, the developer of video and audio editing tools, including the well-known Pro Tools DAW, has agreed to be acquired by private equity firm Symphony Technology Group (STG) in an all-cash transaction worth around USD $1.4 billion, including debt.

The deal is expected to close during Q4 2023, subject to Avid stockholder approval and regulatory approvals, Avid and STG said in a statement issued August 9.

Under the deal, shareholders of Burlington, Mass.-headquartered Avid will receive USD $27.05 in cash for each unit of Avid’s common stock, representing a 32.1% premium over the company’s share price on May 23, the last trading day before Reuters reported that the company was exploring a sale.

The company’s shares jumped 18% that day on the news, having earlier dropped precipitously following a disappointing Q1 earnings report.

As recently as the first week of August, multiple investors were vying to purchase Avid, among them Francisco Partners, the private equity firm that acquired Berlin-based music tech company Native Instruments in 2021, and Kobalt Music Group in 2022.

Founded in 1987, Avid has become a prominent provider of video and audio software and equipment. According to the company’s website, every record nominated for Record of the Year at the 2022 Grammys was made with the help of Avid Pro Tools, and all the films nominated for Best Editing and Best Picture at the 2022 Academy Awards were edited using Avid Media Composer.

The Pro Tools maker also operates a DIY music distribution service called AvidPlay, which distributes music to over 150 major platforms like Spotify, Apple Music, Amazon Music, and Tidal.

Menlo Park, Calif.-headquartered STG is a mid-market private equity firm founded by billionaire investor Romesh Wadhwani in 2002. Among its acquisitions are McGraw-Hill Construction (2014), RSA Security (2020) and McAfee Enterprise (2021).

STG’s acquisition of Avid has been unanimously approved by the company’s board. Upon completion of the acquisition, Avid will become a privately held company and will be delisted from the NASDAQ.

Goldman Sachs & Co. LLC served as advisor to Avid in the sale process, and Sidley Austin LLP served as legal counsel. On STG’s side, Rothschild & Co. served as financial advisor, and Paul Hastings LLP served as legal counsel. Sixth Street Partners and Silver Point are providing debt financing in support of the transaction.

“Since our founding over 30 years ago, Avid has delivered technology that enables individuals and enterprises who create media for a living to make, manage and monetize today’s most celebrated video and audio content across the globe,” Avid President and CEO Jeff Rosica said in a statement.

“We are pleased to announce this transaction with STG, who share our conviction and excitement in delivering innovative technology solutions to address our customers’ creative and business needs. STG’s expertise in the technology sector and significant financial and strategic resources will help accelerate the achievement of our strategic vision, building on the momentum of our successful transformation achieved over the past several years.

“This transaction represents the start of an exciting new chapter for Avid, our customers, our partners and our team members and is a testament to the importance of Avid and our solutions in powering the media and entertainment industry.”

“STG’s expertise in the technology sector and significant financial and strategic resources will help accelerate the achievement of our strategic vision, building on the momentum of our successful transformation achieved over the past several years.”

Jeff Rosica, Avid

John P. Wallace, Chairman of the Avid Board of Directors, added: “This transaction is the result of a comprehensive review of strategic alternatives for Avid. Upon closing, this transaction will deliver immediate, significant and certain value to our stockholders. After carefully evaluating a variety of options, the Board determined that this transaction is in the best interests of Avid and its stockholders.”

STG Managing Partner William Chisholm said the private equity firm, “has admired Avid’s heritage as a category creator and pioneer in the media and entertainment software market for many years.”

He added: “We are excited to partner with Jeff and the management team to build on the company’s history of delivering differentiated and innovative content creation and management software solutions. We look forward to leveraging our experience as software investors to accelerate Avid’s growth trajectory with a deep focus on technological innovation and by delivering enhanced value for Avid’s customers.”Music Business Worldwide