Stone Capital is a private equity firm founded in 2001 by Hank Adler and Randall Stone. It is headquartered in Los Angeles and focuses on investments in the media, telecommunications, technology, and business services industries. Over the past two decades, Stone Capital has made a name for itself with several high-profile deals. Here is an overview of Stone Capital’s investment strategies and some of its major investments over the years.
Stone Capital Prefers Leveraged Buyouts and Growth Capital Investments
Stone Capital’s investment philosophy centers around leveraged buyouts and providing growth/expansion capital to established companies. The firm prefers to take controlling ownership stakes in companies with EBITDA between $3 million to $15 million. Typical equity investments range from $10 million to $50 million. Stone Capital brings an operations-focused approach to its investments – its operating partners have hands-on management experience running mid-sized companies across a range of industries. The firm has expertise in helping portfolio companies drive growth through add-on acquisitions.
Media and Telecom Have Been Major Investment Areas
Stone Capital has deployed significant capital in both the media and telecommunications industries over the years. Major media investments have included the acquisitions of Triad Media, Day Communications, and Video Services Corp. On the telecom side, Stone Capital acquired FiberLight in 2005, one of its most notable deals. FiberLight operates a high-capacity fiber optic network with over 1,300 route miles of fiber, providing mission-critical data and optical bandwidth services to wireless, enterprise, and government customers. Under Stone Capital’s ownership, FiberLight achieved substantial growth through network expansion and multiple add-on acquisitions.
Stone Capital Exited FiberLight in 2010 in a $730 Million Sale
In 2010, Stone Capital sold FiberLight in a $730 million transaction, netting an impressive 5x return on invested capital over a five year holding period. The sale of FiberLight generated outsized profits for Stone Capital and its limited partners. Stone Capital’s growth strategy for FiberLight, centered on strategic acquisitions and network expansion, helped transform the company into one of the largest competitive fiber optic networks in the U.S. This highly successful investment demonstrates Stone Capital’s operational expertise in the telecom sector.
Other Notable Deals Include BlueStar Energy and LDiscovery
In addition to the FiberLight investment, other notable Stone Capital deals include BlueStar Energy Services and LDiscovery. BlueStar was acquired by Stone Capital in 2009 and provides energy efficiency and renewable energy solutions for commercial and industrial customers. Under Stone Capital’s ownership, BlueStar expanded into new geographies through acquisitions. In 2015, BlueStar was sold to Huron Capital Partners. Another major investment was the acquisition of LDiscovery in 2012, an e-discovery and information governance solutions provider. Stone Capital helped transform LDiscovery into a national leader before selling the company to Pamlico Capital in 2018.
In summary, Stone Capital has established an impressive investment track record over the past two decades, with significant value creation in its media, telecom, and technology-focused portfolio companies. The firm’s operational expertise and focus on driving growth has generated outstanding returns for its investors. Key deals like FiberLight and LDiscovery highlight Stone Capital’s capabilities in executing leveraged buyouts and growth capital investments.