Ares nears deal for Summit-backed DuPage

Private equity firm Ares Management is close to buying the practice-management company of Summit Partners-backed DuPage Medical Group, according to a Hart-Scott-Rodino early termination notice.

The filing with the FTC follows a July 14 Buyouts report that New York’s Ares was the frontrunner in a process for the Chicago multispecialty physician group.

The HSR filing shows that Ares has been cleared to acquire DMG Practice Management Solutions LLC, DuPage’s physician-owned practice-management company. PE firms tend to buy only this portion of a medical group for legal reasons, one source familiar with the matter said.

DMG Practice Management Solutions operates as Boncura Health Solutions (formerly Midwest Physician Administrative Services). The unit provides services ranging from compliance and reporting to billing and payroll to hospitals and health systems, independent practice associations and accountable care organizations.

When Summit led a $250 million investment in DuPage in December 2015, the capital injection was intended to fuel growth within DuPage’s management-services organization, an announcement at the time said.

Cain Brothers advised DuPage on the equity and debt investment from Boston’s Summit.

Ares intends to buy the company through Ares Corporate Opportunities Fund V LP, the HSR filing shows. The firm’s fifth global flexible capital private equity fund closed in April 2016 on $7.85 billion of total commitments.

Led by CEO Mike Kasper, DuPage is the largest independent multispecialty physician group in Illinois, with more than 600 physicians in over 50 specialties. The group, whose specialties range from cardiology to orthopedics, serves more than 80 Chicago suburbs.

In a March presentation with physician practice association AMGA (Advancing High Performance Health), DuPage said that it generates more than $800 million in revenue on a run-rate basis. It projects its top line will grow to $1.1 billion in 2019, according to the report.

DuPage is considered a highly regarded asset largely because it operates a well-coordinated physician model. Unlike many other medical groups, it has a sophisticated method of enhancing ancillary offerings by referring patients to partners within the group, a source previously explained. This then boosts doctor groups’ compensation and, ultimately, DuPage’s top line.

The Summit team leading the DuPage investment includes Managing Director Darren Black and Vice President Ross Stern.

A DuPage spokeswoman declined comment, while representatives of Summit and Ares didn’t immediately return requests for comment.

Action Item: Get in touch with Summit’s Darren Black at +1 617-824-1011

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