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Linden poised to make more than 3.6x its money on Young Innovations

  • Young commanded EV just south of $800mln
  • Dental-supply company sees >$60mln adj. 2017 EBITDA
  • Chicago healthcare firm fundraising for Fund IV; $1.25 bln target

Chicago PE shop Linden Capital Partners stands to make more than 3.6x its investment in Young Innovations, according to two sources familiar with the situation.

Jordan Co, with offices in New York and Chicago, agreed to acquire a majority stake in the dental supplies company, the firm said this week.

Linden, which has owned a controlling stake in Young since January 2013, will remain a minority investor.

Financial terms weren’t disclosed in the Monday announcement, but the deal commanded a total enterprise value a little below $800 million, the sources said. Earth City, Missouri-based Young is projecting 2017 adjusted EBITDA north of $60 million, one of the sources said.

The sale to Jordan concludes a competitive sales process that encompassed both strategics and financial groups, one of the sources said. Jefferies and William Blair served as sell-side advisers on the deal.

Sources described Young as a solid business, which under the direction of CEO Dave Sproat, has consistently strengthened its product mix of dental equipment and supplies.

Fueling much of Young’s growth has been an aggressive M&A strategy. The company added American Eagle Instruments and VarnishAmerica in May and July, respectively, following its 2016 purchase of The Orthodontic Store. Previous tuck-ins were made through Young’s Microbrush International unit, which scooped up DentiSmart and Dry Tips.

Young operates through two divisions: manufactured products, which it sells through dental distributors, and products that are supplied directly to dental professionals. Competitors include the likes of publicly traded Dentsply Sirona and Danaher, as well as a number of smaller providers.

Linden completed its take-private of Young through an all-cash transaction valued at about $314 million in January 2013.

For Linden, the exit comes on the heels of its investment in another dental services company.

The PE group in October announced it had completed a majority recapitalization of Smile Doctors, which offers management services to orthodontics practices in Texas and Georgia. Its previous backer, Sheridan Capital Partners, rolled over equity alongside management in connection with the deal.

Financial terms of the deal weren’t disclosed, but the sources said Smile Doctors, accounting for the completion of recent bolt-on deals, accounts for slightly north of $40 million in EBITDA. Twin Brook Capital Partners said it provided $325 million in financing to support the deal.

Linden also owns Sage Dental Management, a dental service organization serving Florida and Georgia.

The PE group is fundraising for its fourth fund, targeting $1.25 billion, Buyouts previously reported.

Jordan Co has also focused on the dental segment. The middle-market buyout firm in 2013 exited its investment Zest Anchors, which makes overdenture attachments, through a sale to Avista Capital Partners.

Action Item: Check out Linden’s portfolio here: http://www.lindenllc.com/portfolio/investments/

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