Gryphon’s Smile Brands awaits first-round bids

San Francisco’s Gryphon Investors is seeking a buyer for Smile Brands, one of the largest dental support organizations in the country, according to people familiar with the matter.

San Francisco’s Gryphon Investors is seeking a buyer for Smile Brands, one of the largest dental support organizations in the country, according to people familiar with the matter.

Deal books were recently distributed, with first-round bids from potential buyers due later this month, the people said.

Moelis is conducting the sales process for Irvine, California-based Smile Brands, the people said. The auction will strictly target financial sponsors, they said.

Smile Brands is marketing approximately $70 million in pro forma adjusted Ebitda. While too early in the process to determine a likely valuation, similar assets have traded in the 11x to 13x multiple range, sources said.

Gryphon bought Smile Brands in August 2016 from Chicago private equity shop Welsh, Carson, Anderson & Stowe. Gryphon previously owned the company between 1998 and 2005.

Moelis offered sell-side advice on Smile’s 2016 sale, while Houlihan Lokey advised Gryphon.

Smile Brands offers various business support services—ranging from in-house marketing and recruiting, metrics and system technology and automation—through exclusive long-term agreements with affiliated dental groups. Today the company supports more than 400 practices across 16 states, its website states.

The company’s inception dates to 1998, when a management team that included Co-Founder and CEO Steve Bilt and CFO Brad Schmidt combined three West Coast dental companies to form Bright Now! Dental. The organization was rebranded as Smile Brands in 2009.

In recent industry activity, Jacobs Holding, the family office of Switzerland’s Klaus J. Jacobs, clinched a deal for North American Dental Group. The August deal marked the conclusion of a Jefferies-run sales process, providing an exit for Abry Partners and The Riverside Co.

Other PE-backed dental support organizations of scale include KKR’s Heartland Dental, L Catterton’s Dentalcorp, JLL Partners’ American Dental Partners and New Mountain Capital’s Western Dental & Orthodontics.

Gryphon, for its part, has invested in various healthcare services specialties. Earlier this year the firm surfaced as the winning bidder for LLR Partners’ LEARN Behavioral, a provider of autism-treatment and educational services.

Other current healthcare portfolio companies include Water’s Edge Dermatology and OB Hospitalist.

In recent exits, Gryphon in September agreed to sell ECG Management Consultants, a provider of consulting services to healthcare providers, to Siemens Medical Solutions USA, a subsidiary of Siemens Healthineers.

Gryphon, the company and Moelis declined to comment.

Action Item: Check out Gryphon’s latest Form ADV: https://bit.ly/2B2Crjf