Kilmer’s Altasciences said to fetch 8.5x multiple

Audax Private Equity prevailed in the auction for Altasciences Clinical Research, one of the largest independent providers of services that support early-phase drug development for biotech and pharma companies.

The seller is Toronto sponsor Kilmer Capital, which took its initial majority stake in Algorithme Pharma in 2007. The company bulked up in May 2013 through its acquisition of Vince and Associates. The combined businesses make up Altasciences.

A June 13 announcement didn’t disclose terms, but two sources said the Laval, Quebec, company generates north of C$100 million (US$76 million) of revenue and C$20 million (US$15 million) of EBITDA. The asset commanded an about 8.5x multiple of EBITDA, one source said.

The announcement confirms a March Buyouts report unveiling that middle-market investment firm Fairmount Partners was conducting a sales process for Altasciences.

Altasciences is focused on Phase 1 clinical-development services and bioanalytical lab operations. The clinical contract research organization offers an array of early-phase oriented services including clinical conduct, biostatistics, regulatory services, medical writing, data management and bioanalysis.

The company encompasses three clinical research facilities: Algorithme Pharma in Montreal; Vince and Associates Clinical Research in Overland Park, Kansas, and Algorithme Pharma USA in Fargo, North Dakota.

The process kicked off around the start of the year and drew interest from both strategics with a natural interest in the field and PE groups with a stated desire in pharmaceuticals, one of the sources said.

Altasciences’ strong market position and highly regarded management team boded well for the company during the sales process, sources said, pointing to the 2010 appointment of Chris Perkin as CEO. Perkin joined the company from publicly traded Charles River Laboratories.

Management’s desire to remain on board and retain a significant ownership stake was an important factor that ultimately produced a transaction with PE and not a strategic, one of the people said.

Audax, for its part, typically partners with committed management teams. Plus, it has a track record in pharma services.

One source cited Audax’s successful investment in Chesapeake IRB, which it exited in 2016 via a sale to Chicago PE group Linden Capital Partners. Chesapeake IRB provides legally mandated institutional review board services to pharma, biotech and medical-device companies.

At the same time, CRO giants the likes of Quintiles IMS do encompass Phase 1-related offerings but the focus is really on supporting life-science companies during important late-phase clinical trials. In other words, Altasciences would have likely been a tiny and non-core operation if it joined one of the big strategics.

Another early-phase CRO that has yet to trade hands is Altasciences’ smaller and more lab-focused peer, QPS Holdings. Buyouts reported in March that the company had retained Wells Fargo months earlier to explore a sale.

While QPS is backed by New York’s Argentum Capital and Chicago’s First Analysis Venture Capital, Founder and Chairman Benjamin Chien remains the controlling shareholder, one source noted.

Action Item: Touch base with Audax Group Co-CEO Geoffrey Rehnert at +1 617-859-1503

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