Corporate Financing Week

October 30, 2006

Silicon Valley Shop Hunts for Tuck-Ins

Garnett & Helfrich Capital, a Menlo Park, Calif.–based private equity fund, plans to acquire three to five more companies to add to Celunite, a company it recently acquired. David Helfrich, partner, said the firm wants to take advantage of increased specialization in the cell phone industry. Celunite provides Linux-based software services for cellular companies.

Terms of the deal were not disclosed, though Garnett & Helfrich typically invests between $40 million to $70 million in equity in companies with revenues ranging from $40 million to $200 million.

“We’re not finished. We’ll be rolling up a number of other businesses, including ones form large public companies,” said David Helfrich, partner. Helfrich declined to name any particular companies.

“Traditionally cell phone developers manufactured every piece of the cell phone. They can’t keep doing that. There are thousands of different models,” he said. “To custom develop every phone costs time and money. It’s much like what happened with computer industry when it went to smaller computers from desktops.”

Helfrich said the firm would likely add one more company by the end of 2006 and two by the middle of next year.

The firm specializes in acquiring spin-outs from large companies. In the past two years it acquired a 50% stake in Wyse Tehnology fron the Koo’s Group, a Taiwanese investor; Ingres Corp. from Computer Associates; and Blade Technologies from Nortel.