Baird Capital pursues ‘thesis-driven’ healthcare deals like autism treatment

Baird Capital, the private equity arm of Robert W. Baird & Co, sees a stronger pipeline of potential deals in the healthcare sector as the firm focuses on specific niche businesses, an executive at the firm said.

Michael Bernstein, partner in Baird’s U.S. PE group, said the firm is zeroing in on subsectors within its main business types: healthcare, industrial, technology and services.

“We’ve become very thesis-driven investors,” Bernstein said in an interview during Baird’s 2016 Global Healthcare Conference at New York City’s Palace Hotel on Sept. 7 and 8. “We develop a thesis on the types of businesses we’d like to own and then pursue them fairly aggressively. That strategy may be bearing fruit.”

As Baird’s lead executive on healthcare deals, Bernstein said the firm is focusing on behavioral health, specifically substance abuse and autism treatments. Autism treatment is a highly fragmented business that may be ripe for consolidation.

See Buyouts, May 16, 2016, “Aiming at Addiction.”

“We’re looking at deals specifically in both of those areas,” he said. “It’s highly likely within the next year that we’ll succeed in making an investment.”

Baird Capital’s focus on autism treatment and addiction has become known among bankers and other deal makers, he said.

“If you’re an owner of an autistic [treatment] business and thinking about a deal, we’ll get to see it,” he said. “The investment-banking community is aware of our focus now.”

With a focus on middle-market businesses, Baird Capital most often buys founder-owned companies, but also acquired strategic spinouts. Baird Capital operates separately from Baird’s investment-banking unit on deals, but it’s able to tap some of the research produced by that unit’s analysts, he said.

Baird Capital works more closely with the firm’s VC arm on deals. The two units share certain themes such as investing around infection prevention.

Bernstein declined comment on which Baird fund it’s using for deals, or on any fundraising activities by the firm.

In July, Baird disclosed a $300 million target for Baird Capital Global Fund I, according to a filing. Baird’s fourth VC fund closed in 2014 with $185 million in commitments.

Its fifth U.S. PE fund closed in 2011 with $290 million in commitments. It also raised its second U.K. PE fund in 2013 with about $80 million in commitments.

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An autistic child sits on a horse during the Horse Therapy Special Children program at the Mounted Police Sub-Division in Bangkok June 17, 2014. Photo courtesy Reuters/Chaiwat Subprasom