PE-backed Sarnova trades hands again through $900 mln deal with Investor AB unit

  • 2016 recap valued Sarnova at ~$560 mln
  • Water Street’s investment dates to 2008; Talisman became largest shareholder in 2016
  • Harris Williams offered sell-side advice

Sarnova has found itself another owner just two years after Water Street Healthcare Partners handed over a majority stake to Talisman Capital Partners.

Patricia Industries, a subsidiary of Sweden’s Investor AB, said Monday it agreed to buy the specialty medical products distributor in a deal that assigns the company a $903 million enterprise value. Patricia Industries said it would inject about $500 million in equity in the Dublin, Ohio company. The pending sale to Patricia came together outside of a formal auction, two sources said.

Water Street is rolling over a minority equity investment in connection with the sale to Patricia. The transaction comes after Water Street in early 2016 sold a majority interest in Sarnova to Talisman through a recapitalization that valued the company at about $560 million, two sources said. The 2016 recap provided a seemingly handsome return for Water Street’s Fund I investors, which had injected up to $75 million in the initial 2008 investment in the newly-formed Sarnova.

Water Street through its third fund invested an additional $75 million in equity in Sarnova through the 2016 recap, maintaining a significant minority stake, according to one of the sources. Talisman, of Columbus, Ohio, became the largest shareholder in connection with transaction.

Water Street is rolling over its equity stake alongside Matt Walter, who founded Talisman and is executive chairman of Sarnova.

Sarnova posted about $555 million in 2017 sales alongside Ebitda margins of about 12 percent, Patricia said, implying Ebitda of about $65 million for the corresponding period and an EV-to-Ebitda multiple approaching 14x.

Chicago’s Water Street formed Sarnova about a decade ago through the merger and joint acquisitions of Bound Tree Medical and Tri-anim. The merged entity has since completed eight acquisitions. Walter also founded and was the former CEO of Bound Tree, and helped lead the formation of Sarnova.

Led by CEO Jeff Prestel, Sarnova today comprises of four business units: Bound Tree, Tri-anim, Cardio Partners and Emergency Medical Products. The company distributes more than 100,000 healthcare products to emergency care providers, hospitals, advanced patient-care facilities, schools and universities, businesses and federal government agencies.

Managing Partner Tim Dugan and Partner Chris Sweeney serve on Sarnova’s board of directors.

Harris Williams advised Water Street on the transaction, while Patricia Industries received banking advice from Cain Brothers.

Water Street recently hired Harris Williams to sell another one of its portfolio companies, worksite-health provider Premise Health, Buyouts reported last week.

Representatives of Water Street and Talisman declined to comment, while those with Patricia couldn’t immediately be reached.

Action Item: Read about Water Street-backed Premise Health, which recently tapped Harris Williams for an anticipated auction:

Update: This story has been updated with new information on adviser roles.

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