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Gryphon buys Smile Brands for second time

Smile Brands Group Inc, which provides support services for dental practices, was sold to a buyout shop for a fourth time.

Gryphon Investors said it acquired Irvine, California-based Smile Brands, which supports more than 1,300 dentists and hygienists in nearly 350 offices nationally. Terms weren’t disclosed.

All of Smile Brands was sold, including the majority stake held by Welsh, Carson, Anderson & Stowe and the minority holding owned by Freeman Spogli & Co, a source said. Gryphon has a majority of the company, a source familiar with the transaction said.

The deal marks the second time Gryphon has owned Smile Brands. The middle-market private equity firm previously owned the company from 1998 to 2005, when it was known as Bright Now! Dental Inc.

In 2005, Gryphon sold a majority of the company to Freeman Spogli for about $340 million, Buyouts reported. Welsh Carson acquired a majority in late 2010.

Smile Brands has struggled since 2010 when the recession caused growth to stall, the source said. Under Gryphon, Smile Brands offices grew to 250 while revenue jumped to more than $350 million by the time it sold in 2005, then grew more to about 325 offices in 2010.

Smile Brands currently has about 350 offices and about $500 million in revenue.

In April, Moody’s downgraded Smile Brands’ corporate family rating to Caa3 from Caa2. Moody’s defines Caa debt as “speculative of poor standing” and subject to very high credit risk. Moody’s noted the company’s leverage, debt exceeding 10x EBITDA, and said the likelihood of debt impairment was high.

With the sale, Steven Bilt returns to the post of CEO of Smile. Bilt, along with Brad Schmidt, founded Bright Now! in 1998. Gryphon provided financial backing at the time. Bilt, who was president and CEO, and Schmidt, as CFO, remained with the company when Freeman Spogli acquired it and when it was sold to Welsh Carson.

Bilt left Smile at the end of 2013, the source said. He and Schmidt rejoined Gryphon in June 2015 to form OneSmile, which now operates as a sister company to Smile Brands, the source said. Bilt is again CEO of Smile Brands while Schmidt is CFO, a statement said.

Houlihan Lokey provided financial advice to Gryphon, while Kirkland & Ellis LLP acted as legal adviser.

Richard Harding, Jeff Raich and Ko Kobayashi of Moelis & Co were financial advisers to Smile Brands, while Ropes & Gray was the attorney.

Smile Brands and Welsh Carson could not be reached for comment.

Action Item: Contact Smile Brands: +1 714-668-1300.

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