TPG Growth wins auction for Medical Solutions in $500 mln deal

Beecken Petty O’Keefe & Co. unloaded a majority of its investment in Medical Solutions in a deal valued around $500 million, Buyouts has learned.

TPG Growth, TPG Capital’s middle-market and growth-equity arm, said May 8 it agreed to acquire the largest U.S. independent travel nurse staffing agency. Terms weren’t disclosed.

The move follows a March Buyouts report that Medical Solutions had tapped Jefferies to explore a sale. Piper Jaffray co-advised the sellers, a news release said.

The parties began talks about three months ago, with a handful of financial buyers advancing through the end of the sales process, two sources familiar with the matter said.

Medical Solutions, which places registered nurses in temporary travel assignments nationwide, generated EBITDA of some $50 million over the past 12 months, one source said. That implies an enterprise value-to-EBITDA multiple in the ballpark of 10x.

The transaction comes less than two years after Chicago sponsor Beecken Petty and Nashville venture capital firm Heritage Group completed their recap of Medical Solutions. The deal marked an exit for former backers McCarthy Capital and Tenex Capital.

Medical Solutions has grown rapidly under Beecken Petty. Helping set the stage for a sale, the firm reached certain five-year targets in about 1 1/2 years, a source noted.

Beecken Petty will retain an equity stake in connection with Monday’s transaction. Certain members of management will also roll over a minority ownership stake.

A continued nursing shortage ought to present continued runway for growth under TPG. Medical Solutions is expected to leverage the firm’s relationships with various health systems, while add-on acquisitions in travel nursing or ancillary areas may also be on the table, one of the sources said.

Recent activity in travel nursing includes Altaris Capital Partners’ sale of Healthcare Staffing Services to Thomas H. Lee Partners in September 2015. Harris Williams & Co. advised the sellers on the process.

Among the most sizable PE-backed healthcare-staffing companies is CHG Healthcare Services, of which Leonard Green took control in a November 2012 secondary buyout from J.W. Childs. Ares Partners co-invested in the transaction.

While terms of the CHG deal weren’t disclosed, Reuters reported that the sellers aimed to fetch about 11 times EBITDA to produce a $1-billion-plus transaction.

UBS and SunTrust Robinson Humphrey advised and provided financing to TPG Growth.

TPG turned to Kirkland & Ellis for legal advice on the deal, while Paul Hastings counseled the sellers.

Representatives of Beecken Petty didn’t return a call Monday, while those with TPG declined to comment.

Action Item: Beecken Petty’s current portfolio: http://bpoc.com/portfolio/

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