Alliance Entertainment, the second largest music wholesaler in the United States, has been acquired by two private equity firms, Platinum Equity and the Gores Group. Financial terms of the transaction were not disclosed.

Alliance Entertainment is the largest one-stop in the U.S., providing CDs, DVDs and videogames to more than 14,000 retail locations. In addition to its one-stop capabilities, Alliance Entertainment is also the largest supplier of fulfillment services for online CD and DVD stores and it is the second largest rackjobber in the U.S., behind Anderson Merchandisers.

Billboard estimates Alliance Entertainment's annual revenues at $750 million. It was the sixth largest music account in the U.S, with nearly 6.1% in market share.

Since 2005 Alliance Entertainment had been a division with Source Interlink the magazine publisher and distributor. But that company's balance sheet was saddled with a heavy debt load, which ultimately led to a pre-packaged Chapter 11 filing, in which the equity owners were forced out and Citigroup, the debt lender, became the owner of the company.

While Alliance has performed well over the last five years, it has basically relied on its sales force to build sales. But with the latest turn of events, Alliance Entertainment CEO Alan Tuchman says the new owners will help the company become " a powerful force in this industry.”

Tuchman said that not only does the Alliance Entertainment management team "still see life in the CD and DVD space," but the company sale shows that investors also see opportunity in the marketplace.

"The market for distributing media content is highly fragmented and rapidly evolving," said Johnny O. Lopez, the partner at Platinum leading the Alliance Entertainment investment, in a statement. "However, we have a great deal of experience assisting companies to thrive within industries in flux. With our combined operational and financial support, M&A expertise, and the company's established management team, Alliance Entertainment will have all the elements it needs to grow."

Alliance Entertainment manages a physical inventory of 400,000 CD, DVD and videogame titles in its state-of-the-art distribution center in Shepherdsville, KY.

Major suppliers who have been briefed on the acquisition say that they have confidence in the Alliance Entertainment management team and the new owners, and will be providing credit to the company going forward.