Company Overview

IDS is the leading U.S. provider of inmate education systems. Through its secure, electronic hardware and software platform, IDS increases inmate access to educational and other digital content, which facilitates rehabilitation and reentry into society.

GTL leads in the fields of correctional technology and government payment services with visionary solutions and customized products that integrate seamlessly to deliver security, financial value, and ease of operation for its customers.

Situational Overview

As a part of our government outsourcing practice, BCA identified IDS as an innovative correctional education company and had been discussing strategic alternatives with Dr. Turner Nashe for about a year.

IDS’ ability to incorporate best-of-breed learning management systems (“LMS”) and educational content in a single product made IDS a desirable education partner within the corrections industry for larger companies selling into this sector.

GTL, a major customer and partner of IDS, identified IDS as a potential acquisition target to aid their diversification strategy.

GTL submitted an unsolicited term sheet to IDS to purchase 100% of the company and have Dr. Turner Nashe oversee the educational content efforts of the combined operations.

BCA Strategy

BCA believed there was an opportunity to significantly improve GTL’s initial term sheet that undervalued the earnings potential of IDS given its robust pipeline and unique product offerings and recommended negotiating better terms.

BCA led negotiations that resulted in the execution of a significantly improved letter-of-intent. Specifically, enterprise value was increased 45%, cash-at-close rose 28% and the earn-out portion of the deal was reduced by 33%.

BCA managed the due diligence process and the transaction closed on the terms outlined in the greatly enhanced letter-of-intent.

Transaction Result

The final valuation exceeded the initial direct offer by 45%. As importantly, the transaction enabled the owners to remain with the business under favorable employment terms and preserve Dr. Nashe’s interest in other entrepreneurial ventures.

Sell-side Advisory to

“Brentwood Capital, our investment banking advisor, played a critical role in optimizing the terms of the deal and closing a transaction that was a great outcome for the IDS shareholders.”

- Dr. Turner Nashe Jr.
CEO, Innertainment Delivery Systems