Happy Tuesday!
Just a reminder, only a few days left to get in your Deal of the Year submissions. The deadline is Monday Feb. 10 by end of day. You can send them straight to me at cwitkowsky@buyoutsinsider.com.
First deal: One of the emerging managers we’ve been tracking is Grant Avenue Capital, formed by ex-Apax Partners executive Buddy Gumina in May 2019.
The firm is investing on a deal-by-deal basis and may come to market with its first fund as early as 2021, Sarah Pringle writes on PE Hub.
The firm struck its first deal, carving out two divisions from HCR ManorCare to create a new physical rehab and medical staffing platform, Sarah writes. The two divisions are Heartland Rehabilitation and Milestone, which will operate under newly created brand H2 Health, Gumina said.
Heartland is a national provider of outpatient physical rehabilitation care, with services including physical, occupational and speech therapy. The business operates more than 60 outpatient facilities across seven states. Milestone is a per-diem, travel and contract clinical staffing business, serving healthcare providers and facilities.
Gumina said the acquisitions have been in the works for about 12 months, with an agreement to carve out the businesses signed in October.
“These obviously were corporate orphans [and] clearly small relative to the size of HCR, but they are really good at what they do,” Gumina said.
Big issue: One of the most important aspects of a private equity firm is its plans for the future stability of the enterprise. This is done through succession planning – tapping the organization’s next generation of leadership, and creating a clear path for future leaders.
Limited partners, along with past performance, view stability of team as a vital component in their calculation of whether to back a firm. Succession planning has become much more of an issue in recent years as the industry matures, and as LPs agitate for firms to get serious about figuring out who is going to run the show in the future.
This is such a big issue for LPs, because primarily they are backing people, not brand names. They want to know what individuals are running the strategies that sound great on paper. Who are they, what have they done in the past, what are they like in person, how do they interact?
This month, Justin Mitchell explores this issue in-depth. The idea is that, when investors look close enough, they can see that the people driving returns might be those way down the ranks in an organization. Those people, who are racking up strong performance, need to be protected, or they will be out the door, potentially forming a competing firm.
Top Scoops
Banner Ridge Partners, launched last year by former head of Siguler Guff’s secondaries group, wrapped up its inaugural fund on $550 million, writes Kirk Falconer. Check it out here.
Clearlake Capital Group, in partnership with management, agreed to acquire Innovative XCessories & Services from Olympus Partners. Check out our news brief here.
Have a great day! Reach me with good tips n’ feedback at cwitkowsky@buyoutsinsider.com, on Twitter or find me on LinkedIn.
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