Iron Data LLC made no secret of being on the prowl for M&A targets while under Thompson Capital Partners’ ownership, but lately the Atlanta-based data storage provider has been relatively quiet on the dealmaking front.

Once Thompson launched an auction, Iron Data took a step back.

“From a finance perspective, we had to make sure our own backyard was cleaned up,” Iron Data president Chris Reed tells Mergers & Acquisitions.

“We did go through a formal [sale] process,” he added. “We talked to a few private equity firms and were interested in a number of them, but narrowed it down.”

Enter Arlington Capital Partners. The Chevy Chase, Md.-based firm announced late Tuesday, May 10, that it recapitalized and acquired Iron Data for undisclosed terms.

Reed did not reveal the names of rival bidders or Iron Data’s price tag. However, under new ownership, the company is now able to exceed the $75 million-mark it spent on deals while under Thompson’s wing and make up for lost time, he said.

“The size of the acquisitions are going up,” Reed added.

In its heyday, Iron Data completed seven deals since November 2005, including three while under Thompson Street Capital’s ownership since 2007. Even though it continued to look at potential transactions over the course of last year, none were completed.

Iron Data completed its last acquisition in July 2010, when it purchased CAVU Corp. The Raleigh, N.C.-based company provides regulatory software solutions for government agencies throughout North America.

Around that time, Iron Data’s CEO Jeff Smock told local media that he was banking on big government and the need for clients to navigate accompanying regulations as a way for the company to broaden its offerings.

That explains why it merged with Versa Systems, another software solutions provider for government agencies, based in Toronto, in January 2010.

Prior to that, Iron Data hadn’t completed a deal since November 2007 when it acquired I. Levy & Associates Inc. The St. Louis, Mo.-based target develops software that assists in processing claims for social security disability payments.

“Thompson Street joined the capital structure at the same time we made the acquisition for I. Levy,” Reed explained. “They made an investment as part of that acquisition.”

After that, dealflow lagged as the economy downturned, but there was plenty of organic growth. In March, Iron Data opened an office in Shenzhen, China to complement its office in Manila, Philippines and last May it set up a European headquarters in Amsterdam.

During this time, the company also grew from 300 employees to 400.

Now, Iron Data is better positioned to bolt-on low to middle market players, but it may face competition from Xerox Co. subsidiary Affiliated Computer Services Inc., Reed says.

Last month, Dallas-based ACS made two deals. It completed its first European-based customer care market acquisition, picking up the Benelux-based customer care provider Unamic/HCN. It followed that with the purchase of CredenceHealth, a software provider that assists hospitals in analyzing patient data.

For the Arlington transaction, Russ Richards of King & Spalding LLP in Atlanta provided Iron Data and Thompson with legal counsel while Dan Cornell of Morgan Keegan & Co. provided financial advice. Cornell was with Jefferies & Co. when the transaction started, but switched to Morgan Keegan by the time the deal closed.

Kirkland & Ellis LLP and Jenner & Block LLP provided legal counsel to Arlington on the buy-side.

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