Brentwood Associates extracts Jefferson Dental from Black Canyon for close to $200 mln

Black Canyon Capital has concluded its Moelis & Co-run auction for Jefferson Dental Clinics, selecting Los Angeles private equity group Brentwood Associates as a buyer for the dental-support organization.

Terms weren’t disclosed, but the North-Texas-focused company is said to have commanded around 11x its close to $17 million in EBITDA, one source said. That implies a deal valued around $187 million and exceeds the 9x to 10x multiple the source had expected earlier in the process.

The transaction comes after Black Canyon last year retained Moelis to shop the company officially operating as JDC Healthcare Management, as reported by The Deal in January. Jefferson received about 20 bids during the first round of its process in December, sources previously said.

Rich Harding, Jeff Raich, Mark Laoun and Ryan Kitchen of Moelis offered advice to the sellers, Buyouts has learned. O’Melveny & Myers provided legal advice to the sellers. Brentwood turned to Kirkland & Ellis for legal advice. Ares Capital provided debt financing to support the acquisition.

Brentwood Associates partner Eric Reiter said the dental sector had been on the firm’s radar for some time when it received the Moelis materials on Jefferson late last year.

Importantly, Jefferson “checked a lot of boxes around diversity and risk,” he said, emphasizing patient and payer mix. Reiter wouldn’t elaborate but said the dental company’s Medicaid-exposure is south of 20 percent.

Jefferson also accepts most private insurance plans, Chip and Medicare plans, as well as financing and discount plans, its website shows.

While Brentwood is a consumer-focused firm, its playbook has a lot of relevance to Jefferson, Reiter said. Its multi-unit aspect was among compelling factors, as Brentwood’s investment thesis includes growth beyond Texas through both acquisitions and development of de novo clinics, same-store-sales growth and new lines of business.

Jefferson provides general dentistry, orthodontic and other specialty dental services primarily to the Hispanic community in North Texas. Its network encompasses 53 clinics in the Dallas/Fort Worth and Houston metro areas.

Black Canyon in July 2009 recapitalized Jefferson Dental in partnership with management for an undisclosed price.

Jefferson CEO Chris Strong will continue to lead Jefferson Dental under the new ownership.

Other dental companies on the block include West Coast Dental Services, a $15-million-EBITDA company being advised by Houlihan Lokey. The company entered into an exclusivity agreement to be acquired earlier this year, as first reported by The Deal in January. A deal has yet to be announced.

In other dental deals, Sentinel Capital in January surfaced as the victorious suitor for Toronto’s Altima Dental Centres, a dental-service group generating about $10 million of EBITDA. Houlihan Lokey also conducted the auction for Altima.

Representatives of Black Canyon did not respond to requests for comment on Tuesday.

Action Item: Reach Brentwood’s Matthew Whelan at

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