TPG Capital Buys ESOP Owned Payroll Giant Entertainment Partners
Entertainment Partners, a major payroll and software company, on Tuesday announced that it has agreed to be acquired by TPG Capital, a private equity firm that is also a majority owner of talent agency CAA. EP's current management team will continue in their roles, the company said in a statement.
The acquisition of the employee-owned EP, whose clients include several major studios and many production companies, comes amid a wave of consolidation and investment in the entertainment industry. Terms of the deal, which is expected to close in the second quarter of this year, were not disclosed.
"We're thrilled to have found a partner that is excited about our strategic vision as we support the evolution of the entertainment industry," EP president and CEO Mark Goldstein said in a statement. "Through decades of hard work and dedication by our talented team, and through a rewarding collaboration with the experts — our clients — we have made great strides toward digitizing and integrating production workflow. We now begin an exciting new chapter in which the significant resources and expertise of TPG will greatly accelerate our vision."
The payroll services industry has been going through a wave of consolidation itself. In 2013, Ease Entertainment Services bought Scenechronize and in 2015, EP purchased Ease Entertainment. That same year, Cast & Crew Entertainment Services was acquired by Silver Lake Management and, a year after that, Cast & Crew acquired CAPS Payroll.
The transaction also arrives at a potentially sensitive time, as talent agencies like CAA are locked in a fierce battle with the Writers Guild of America, which has charged that certain agency practices are a conflict of interest. The WGA is likely to order writers to fire their agents en masse April 7 unless the guild and the Association of Talent Agents reach a negotiated solution before then. EP, now CAA's corporate cousin, processes payroll and residuals checks for thousands of writers, as well as actors, directors and crew. The WGA did not respond to a request for comment.
In addition to payroll, EP supplies entertainment-specific software and services that digitize accounting and payment processing, including those related to residuals calculation and direct deposit. (Full disclosure: EP engaged and paid this reporter in late 2017 and early 2018 to deliver an eight-hour course on residuals to its staff.) The company also provides expertise on tax incentives and owns Central Casting, the background (extras) casting service.
"Our investment in Entertainment Partners is the culmination of years of work in the entertainment software and payroll technology industry," said TPG partner David Trujillo. "Entertainment Partners is the market leader in this sector and we are excited to partner with management on their client-first vision for the company. Having invested in the continued proliferation of content across various forms of media, we believe in Entertainment Partners' strong potential for innovation and accelerated growth."
Colin M. Henderson, president of Dallas-based Strategic Investment Counsel Corporation, has served as the company's trustee, providing governance to EP since the inception of its Employee Stock Ownership Plan in 2004. American Discovery Capital acted as exclusive financial advisor to EP in the transaction and Skadden, Arps, Slate, Meagher & Flom LLP was M&A counsel.