BDT and MSD Partners join forces; GTCR creates Blucrest with some familiar faces

BDT and MSD merge to form new advisory and investment firm.

Happy Fri-yay, Hubsters! Aaron here to wind down the week.

Mega merger. Yesterday, BDT & Company and MSD Partners announced that they are joining forces. Both are long-term investors with likeminded strategies around founder-led and family-owned companies. For those who don’t know, MSD is an investment firm that manages capital for the Dell family, including Michael Dell as well as capital of a range of third-party investors.

The goal behind this tag-team is “not to be the biggest firm, but rather to serve our business-owning clients and investors to the best of our ability,” sources behind the deal told me.

“Through this combination, we will create the preeminent advisory and investment firm serving the distinct needs of family- and founder-led business owners and strategic, long-term investors,” the sources added. “The combination brings together two teams with strong leadership, expertise and track records in their respective investment strategies, which will enable the firm to offer a differentiated set of investment opportunities tailored to investors seeking long-term, risk-adjusted compounding returns.”

I was also told that BDT’s core fund strategy remains the same. BDT closed Fund IV last week, gaining $10.4 billion in commitments.

This news of course comes on the heels of EQT and Baring Private Equity Asia completing a merger this week to capture growth opportunities in Asia. Might we see more consolidation in the PE space? I know two does not make a trend but if you have thoughts on this topic and strong feelings about what this means for the industry, feel free to reach out to me at aaron.w@peimedia.com.

To read more on the EQT and Baring tie-up, check out the coverage at our affiliate site PE Hub Europe here.

Familiar faces. GTCR is working with some familiar faces for the Chicago-based firm’s latest platform, Blucrest. As of right now, Blucrest is three people, an idea and a capital commitment from GTCR. Those three people are David Inns, Lynn Herrick and Bill Yates, whom the firm backed in 2017 with the acquisition of GreatCall, a provider of connected health and personal emergency-response services for senior citizens across the US. In their roles as CEO, COO and CMO of GreatCall, the team took the company from pre-revenue in 2006 to an acquisition by Best Buy for $800 million in 2018.

I spoke with GTCR’s David Donnini, managing director and head of business and consumer services, and Tom Ehrhart, principal.
While GreatCall focused on personal emergency devices, Blucrest will “acquire companies and assets to build a consumer services business focused on products that simplify people’s lives,” said Donnini. Blucrest will avoid personal emergency devices to avoid competing with the team’s prior company.

“Now they’re partnering with us again, and that history and business model is something we’d like to find another opportunity to develop,” said Ehrhart, referring to the trio of executives. “When we say that, we mean there will be a product element to it and a recurring subscription. Some examples could be the smart home space, including the remote monitoring of cameras, or the self-installed security or the smart doorbell that then have cloud-based storage, video monitoring, sometimes video verification, on the back end. The purpose of the product is that it gives you that insight, peace of mind. From a business perspective, the attachment of the recurring revenue makes it really attractive. Those are the types of businesses and models, we’re looking at — those with a product element with an actual back-end service and a subscription model.”

You can read the whole story here.

Software surge. If you thought I would go without writing about healthcare, you were wrong! Of course, I need to have at least one item on my favorite sector. Bain & Company released a 2022 healthcare provider IT report and found that software investments remain a top priority for the sector.

According to the report, healthcare IT is a top three strategic priority for almost 40 percent of providers and a top five priority for nearly 80 percent.

Lots of people are still talking about the Amazon and One Medical deal, something we covered a couple of months ago. The report has a lot to say on that topic.

“Big tech players (including Amazon, Microsoft, Google, and Apple) have been pushing into healthcare in recent years with targeted offerings and investments,” said the report. “In general, they have focused on building upon core competencies – such as cloud services, data storage, customer relationship management (CRM), consumer devices, and wearables – to fill in the white space rather than going head-to-head with entrenched incumbent enterprise software providers.”

The report went on to say: “More recently, however, big tech has been investing in healthcare capabilities further afield from core capabilities, especially via M&A activity, reflecting the growing attractiveness of the healthcare market.”

You can read the whole report here.

That is a wrap for me! I will be back on Monday, pinch-hitting for MK Flynn as she is off on her well-deserved vacation. Wishing everyone a great weekend and here’s hoping the Yankees season is still alive next time I write to you.

Cheers,

Aaron