Continuing its deal tear, European buyout shop GHO Capital has agreed to buy Genesis Research with a winning bid of $275 million, according to sources familiar with the pending deal.
The deal concludes a competitive Piper Sander-run sale process conducted out of Europe, PE Hub sources said. Other parties said to be in the running included Rothschild Merchant Bank’s Five Arrows Capital and Cytel, a portfolio company of Nordic Capital and Astorg.
Genesis, based in Hoboken, New Jersey, is an international HEOR (health economics and outcomes research) and Real-World Evidence research organization that supports the life sciences industry out of its offices in the US and UK. Denver-based Rallyday Partners made a growth investment in the business in March 2020.
A high-growth business, Genesis expects to grow EBITDA by some 70 percent in the next year, sources said. Genesis has a number of compelling factors going for it that support its valuation, sources said.
Under a dedicated staffing arrangement, Genesis places highly specialized consultants with clients in the pharmaceutical and biotech industries for extended periods. In contrast to project-based work, contracts under this model are long-term in nature and tend to renew year after year – lending to significant future visibility and stickiness. Further, under the Genesis model, a consultant can move seamlessly from project to project with the same client; if you are doing project-based work, on the other hand, utilization goes down because there is more down time between projects for different clients.
With huge sums of capital going into drug development, there is also a large scarcity value in HEOR broadly speaking and minimal platforms of Genesis’s scale, one source said.
Drugmakers “can’t hire enough people with talent fast enough,” this person said. Clients, in large demand of these type of services, are willing to pay up for sophisticated staffers “because it’s a headache to find all these people.”
One recent deal that supports this trend: Odyssey Partners’ ProPharma Group – a compliance-focused pharma services company – brought in-house a high-end staffing company in May with the acquisition of The Planet Group from MidOcean Partners.
Genesis, for its part, has supported growth with M&A. The company in December 2020 merged with UK-based market access strategy provider SIRIUS Market Access, gaining a large European presence.
GHO earlier this year amassed the largest-ever healthcare-exclusive PE fund in Europe, closing on more than €2 billion ($2.4 billion) of capital available to invest. The firm has been an aggressive buyer of all things pharma services this year, all the while putting feet on the ground in North America with the opening of its debut US office in Research Triangle Park, North Carolina.
The deal aligns with the healthcare specialist firm’s transatlantic theme, investing in both European and North American businesses and fueling companies initial entrance or further growth into one or the either region, and additionally in certain cases, into Asia.
A longtime investor in pharma services broadly, GHO is also a recurring investor in outsourced services businesses that touch on pharma commercialization, market access and life sciences-focused consulting.
This summer it bought ClearView Healthcare Partners in deal valued around the ballpark of $730 million, sources told PE Hub. ClearView can be likened to a global strategy consulting firm such as McKinsey & Co or LEK Consulting, but exclusively for the life sciences industry. Its consultants help pharmaceutical, biotech, medical device and diagnostics companies worldwide build robust strategies through project-based engagements.
In other relevant activity, existing portfolio company Envision Pharma Group in December acquired Two Labs. Two Labs, which helps pharma businesses develop and execute customized launch strategies for products, as well as gain access to new business avenues and geographies for its existing services, subsequently bought Riparian in July.
It also owns Validant, a UK-based quality, compliance and regulatory affairs consulting firm that operates globally with offices in Europe and North America.
2021 deals include its acquisition of Velocity Clinical Research from NaviMed Capital in a deal valuing the US clinical site organization at around $500 million, PE Hub wrote. Most recently, it invested in Germany-based Sanner Group, a global supplier of high-quality active packaging solutions and components for the pharmaceutical, diagnostic, nutraceutical and medtech industries.
GHO declined to comment, while Rallyday and Piper Sandler did not return PE Hub‘s requests for comment.