How is Q3 going for you so far? What is the focus right now, finding deals or shoring up the existing portfolio? Let me know at firstname.lastname@example.org.
Tripling of EBITDA: About a month ago, Levine Leichtman Capital Partners sold Monte Nido to Revelstoke Capital Partners LLC. PE Hub’s Aaron Weitzman reported that LLCP tripled EBITDA on the provider of treatment programs and services to adults and adolescents with eating disorders before exiting, according to a source familiar with the deal.
Aaron had an email exchange with Matt Rich, partner at the Beverly Hills-based firm, to learn more about what the firm did to grow and scale the business. Rich also shared insights on getting deals done in the current environment.
Before LLCP purchased Monte Nido, it was an amalgamation of two founder-backed companies that had not yet been fully integrated, according to Rich. The company operated 13 facilities across four states.
Rich said during ownership, the firm focused on three key initiatives: building out and expanding an outstanding behavioral health management team; leveraging and updating the technology; and expanding the company’s footprint through strategic expansions of facilities.
“Under LLCP’s ownership, we helped Monte Nido open 22 de novo facilities and acquire 10 facilities, bringing its current total to 45 facilities in 15 states,” said Rich. “The M&A efforts also helped the company expand into a new care setting, inpatient facilities, allowing Monte Nido to better care for all types of patients.”
With all the current macroeconomic challenges, PE Hub asked Rich what returns are like in this environment.
“As a structured private equity investor, we are focused on finding great companies with enviable market positions, premium products or services and resultant pricing power, and then partnering closely with their management teams to double, triple, or quadruple EBITDA. Our strategy is not that dependent on leverage levels and pricing, as we’ve shown over our 39-year history,” he said.
PE Hub also asked Rich if it was more difficult to agree to a price tag for this deal and in general if deals are harder to get done than in previous years.
“Per our strategy, we focus on value creation to enable the buyer to directly step into a company and see the potential for future success,” he said. “Whenever there is a buyer and seller, there will be a spread between the bid and the ask, no matter the point in time, but we have not seen a wider gap than normal.
VC or PE: Interesting piece on VCJ today that Bessemer Venture Partners has raised a PE-like fund targeting companies with less of a growthy profile. BVP Forge, led by Rob Arditi and Navid Oreizy, aims to commit $30 million to $125 million per deal across majority and significant minority stakes in software and tech-enabled services companies in North America, Europe, Australia and New Zealand.
Arditi said unlike growth funds, BVP Forge is “not doing traditional growth investing. We’re investing in what we call self-sustaining companies.
“They don’t need capital, but these businesses don’t have that breakout growth potential, so it doesn’t make sense to put those in a venture fund. They don’t have that risk reward profile that you would typically look for, but they’re still phenomenal businesses.”
That’s it for me! Have a great rest of the day. Hit me up with tips n’ gossip, feedback or book recommendations at email@example.com or find me on LinkedIn.