Chicago’s Vistria wins auction for Frontenac’s Behavioral Health Group

  • Vistria invests via Fund II, which closed on $872 mln
  • Frontenac recapped opioid-treatment company in ’11
  • Sell-side adviser: Piper Jaffray

Frontenac has agreed to sell Behavioral Health Group to fellow Chicago private equity shop Vistria Group, according to three people familiar with the matter.

The transaction is poised to close in 2019, one of the people said.

While the deal has not been publicly announced, the agreement values the opioid-treatment network at a little north of 10x Ebitda, one of the people said.

That implies a valuation of $250 million-plus, based upon the Dallas company’s Ebitda of about $25 million.

Buyouts initially reported in July that Frontenac had retained Piper Jaffray for financial advice on a sales process.

Vistria, launched in 2014 by the Chicago entrepreneur Martin Nesbitt, a personal friend of former President Barack Obama, is investing in BHG through its second fund. Vistria Fund II collected $872 million.

Nesbitt serves as co-CEO of the middle-market firm alongside Kip Kirkpatrick, a founding partner of Water Street Healthcare Partners and former One Equity Partners executive.

Behavioral Health Group, which provides medication-assisted treatment for those struggling with opioid addiction, operates 46 outpatient clinics across 11 states.

Jay Higham, former chief of infertility-treatment provider IntegraMed America, holds the CEO post at BHG.

Frontenac’s investment in BHG dates back seven-plus years. The firm in October 2011 completed a recapitalization of the behavioral-health company in partnership with founding management and longtime industry exec Mike Cannizzaro.

The transaction comes as the behavioral health industry, broadly speaking, continues to command strong interest from PE. That includes publicly traded giant Acadia, which, as initially reported by Reuters, has garnered interest from large private equity firms.

Meanwhile, Nautic PartnersOdyssey Behavioral Health tapped Moelis this year to conduct a sales process, Buyouts reported.

Other financially backed opioid-treatment groups include Webster Capital’s BayMark Health Services, Linden Capital PartnersPinnacle Treatment Centers, Revelstoke Capital PartnersCrossroads, Housatonic PartnersAegis Treatment Centers and Warwick Group’s Colonial Management.

Representatives of Vistria declined comment, while those with Frontenac, BHG and Piper Jaffray didn’t return requests for comment.

Action Item: Reach out to Dwight Mussleman, who heads business development at BHG, at +1 214-365-6114