Webster Capital to sell Center for Discovery: sources

Webster Capital is putting eating disorder treatment facility operator Discovery Practice Management Inc up for sale, three sources said.

Cain Brothers is advising on process, which is expected to start later this year, one of the sources said.

Discover Practice Management, which does business as the Center for Discovery, has grown from $3.5 million EBITDA in 2011 to $20 million in 2016, while revenue is $75 million to $80 million, two of the sources said. Webster is looking for bids of 12x to 14x EBITDA for the company, two of the sources said.

The auction is expected to launch in late third or fourth quarter, one of the sources said.

Webster’s investment in the company dates back to 2011 when the private equity firm acquired a majority of Discovery Practice Management, according to press reports. Los Alamitos, California-based Center for Discovery provides residential treatment for children, adolescents and adult women with eating disorders, mental health issues and substance abuse, the company’s website said. Center for Discovery has five locations in states including California, Connecticut and Washington.

The sale comes as Webster is expected to look for a buyer for Epic Health Services Inc later this year, Buyouts reported. Dallas-based Epic Health provides care to 42,800 medically fragile children and adults in 17 states including Colorado, New Jersey, Pennsylvania and Texas. That company could sell for $800 million, Buyouts reported.

Based in Waltham, Massachusetts, Webster Capital invests in middle-market consumer and healthcare companies with EBITDA between $3 million to $15 million, according to its website.

The PE firm is currently investing out of its third fund, which closed at $400 million in 2014, an October statement said. Fund III generated a 0.92x investment multiple as of March 31, data provider Bison said.

Executives for Webster Capital declined comment. Center for Discovery and Cain Brothers could not be reached for comment.

Action Item: Center for Discovery can be reached at 800-760-3934

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