In December 2000, Advent participated in the $670 million syndicated buyout and subsequent recapitalization of Datek Online, a leading Internet-based financial services firm, and its subsidiary, Island ECN, an electronic communications network. Concurrently, Island was spun out as a separate company.
With a business model focused on servicing the most active retail investors, Datek provided the fastest execution of any online broker combined with the lowest transaction costs. At the time of our investment, the company was the fifth-largest online brokerage and leading provider of day-trading software and securities clearing technology. It had grown from a single-branch retail brokerage into a business serving 635,000 customers.
In September 2002, Datek Online merged with Ameritrade, valuing the combined company at approximately $1.3 billion. The merged business, Ameritrade (Nasdaq: AMTD), created the world's leading online retail brokerage, based on number of equity trades per day, with 2.7 million self-directed investor accounts, annual revenue approaching $1 billion and average daily trades in excess of 150,000. The combination was highly synergistic, enabling the companies to reduce back-office and marketing costs, while integrating the best elements of each firm's technology platforms.