Carlyle has struck a deal to acquire Newport Academy, which treats teens suffering from conditions ranging from trauma and depression to drug and alcohol abuse, three sources told Buyouts.
The Washington firm is said to be acquiring the company legally registered as Monroe Operations LLC through its U.S. Equity Opportunity Fund.
Carlyle’s second North American middle-market buyout fund closed in February 2016 at its $2.4 billion hard cap, with plans to make equity investments of $20 million to $200 million. Its first U.S. Opportunity Fund raised $1.1 billion in 2012 and focused on smaller buyouts.
The transaction, which has not been announced, would mark the conclusion of a Moelis-conducted sales process launched earlier this year.
Newport generates EBITDA in the $20 million range, sources said.
Buyouts reported in January that Newport could fetch a multiple of EBITDA of about 6x to 7x. A challenge in the PE-focused process was that Newport’s business is entirely out-of-network, one of the sources noted.
Newport was launched in 2009 by CEO Jamison Monroe Jr, a recovering addict. The California company operates day schools and separate female and male residential teen-treatment centers on the East and West Coasts. It also has outpatient treatment centers in Costa Mesa, California, and Darien, Connecticut.
As the process for Newport comes to a head, eyes are likely to shift to Lee Equity Partners’ Eating Recovery Center LLC. The provider of eating disorder-treatment services also is working with Moelis on a sales process. With about six parties expected to advance to the second round, the auction could produce a $500 million-plus deal, Buyouts reported in early July.
Other assets to keep tabs on include Discovery Practice Management, a Webster Capital Management portfolio company that does business as Center for Discovery.
Webster, which invested in Center for Discovery in 2011, hired Cain Brothers in early 2016 to consider bringing the company to market in Q3 or Q4 of that year. The sponsor ultimately chose to hold off on launching a process.
A Carlyle representative declined to comment. Those with Newport and Moelis didn’t immediately return requests for comment.
Action Item: For a full list of Carlyle’s U.S. middle-market buyout investments: https://www.carlyle.com/our-business/corporate-private-equity/us-middle-market-buyout
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