Moelis spinout NexPhase seals deal for Synergy HomeCare

  • Franchiser of nonmedical home care trades for 13x
  • Other PE in segment: Riverside, PNC Riverarch, Linsalata, Gemini, Investors Management, Altaris, Summit
  • Sell-side adviser: Livingstone Partners

NexPhase Capital Partners, the Moelis Capital Partners spinout, has brought home the win for Synergy HomeCare in a deal valued just south of $80 million, Buyouts has learned.

The transaction underscores continued sponsor appetite in the segment, as Synergy represents at least the eighth PE investment since 2016 in a franchiser of nonmedical senior-home-care services.

Terms weren’t disclosed, but Synergy, Gilbert, Arizona, commanded an about 13x multiple of its about $6 million Ebitda, two people with knowledge of the situation said.

The deal follows a PE-focused auction that produced multiple offers, one source said. Management met with about nine or 10 parties, the source added.

Led by Founder and CEO Peter Tourian, Synergy provides services including companion care and personal care to seniors and those recovering from illness or surgery, as well as individuals who are physically or developmentally disabled.

Synergy’s network encompasses about 140 independently-owned franchisees across more than 300 franchise locations in the U.S.

Tourian will roll over a significant equity stake in connection with the transaction, one of the sources noted.

Synergy turned to Livingstone Partners for financial advice on the transaction, while Gray Plant Mooty provided legal counsel. NexPhase retained McDermott Will & Emery for legal advice.

The investment from NexPhase — launched by former principals of Moelis Capital Partners in January 2016 — follows a flurry of activity in the space in recent years.

Besides strong demographics and a growing preference among seniors to stay in their homes, interest in the nonmedical home-care segment has been fueled by a few factors.

Reimbursement is largely cash pay at most nonmedical home-care agencies, unlike skilled home-health companies that collect expenses via Medicare.

The opportunity could expand further, should Medicare Advantage start paying for these services. At the same time, regulatory and compliance costs are minimal.

Sponsors also like franchisers, as it’s in the best interest of each franchisee to maximize business, while capital expenditures are low and cash flow strong.

In addition, PE has a better shot going after franchise concepts, given that these business models don’t mix well with medical home-health companies that require more centralized oversight.

In 2017, Riverside Co invested in ComForCare and PNC Riverarch Capital purchased Homewatch CareGivers via its Authority Brands platform.

The year before was even busier. In 2016 Linsalata Capital Partners took a majority stake in Home Helpers Home Care; Gemini Investors invested in Always Best Care; Investors Management bought Right at Home; and Altaris Partners acquired Senior Helpers from Levine Leichtman.

The latter, in particular, speaks to the success investors have had in the space. Levine Leichtman’s October 2016 sale of Senior Helpers to Altaris produced a 74 percent internal rate of return and a 10.1x multiple of invested capital for the firm, Buyouts reported.

Summit Partners also backs Home Care Assistance, but how far back its investment dates is unclear.

Led by Managing Partners Kurt Larsen and Ted Yun, NexPhase focuses on growth-oriented healthcare, industrial services, software and consumer deals.

The New York firm in March launched a new interventional pain-management company, Clearway Pain Solutions Institute, in connection with its acquisition of Gulf Coast Pain Institute.

Action Item: Check out the rest of NexPhase Capital’s portfolio here: http://www.nexphase.com/portfolio

Correction: This story has been updated to list industrial services as an investment focus for NexPhase. A previous version incorrectly identified financial services as a segment of focus.

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