Another scale carve-out process is underway, with credit reporting agency TransUnion evaluating a sale of its healthcare revenue cycle management subsidiary, TransUnion Healthcare, PE Hub has learned.
While the company began fielding first-round bids just over a week ago, with at least one party bidding at $1.6 billion and others lower, I’m told — it appears to be another case in which valuation complexity is at play.
Approximately $100 million of EBITDA was marketed for TransUnion Healthcare, with initial valuation guidance for the business in the $1.9 billion to $2.2 billion range, sources said.
Valuation guidance has since dropped to around $1.6 billion to $1.9 billion, some of the sources said. They attributed this to a lower EBITDA figure that potential buyers are using to bid – which for some is closer to $70 million to $80 million, when excluding covid-adjusted add-backs and capex.
An observation: Many non-healthcare companies have acquired their way into healthcare and healthcare IT, acknowledging how much opportunity there is to be had. But in the last 20 years or so, many of those endeavors have ended with exits or attempts to exit in disappointment. “When you think about what big hospitals and healthcare systems need today — for those that do nothing [in] healthcare — it gets harder,” as one PE source put it.
Consider the unprofitable IBM Watson Health (whose latest sale process has so far failed to lock down a buyer), or other non-healthcare giants like GE, Qualcomm or Microsoft, which have all made forays to get in, and out, of healthcare — and in many cases with limited success.
TransUnion for its part is not in this camp, ultimately creating something of real value and scale in healthcare, I’m told. But TransUnion Healthcare’s growth and performance has been lackluster over the last couple years, sources said. That said, there is a perception among some buyers that under new ownership in which it is no longer a non-core unit, TransUnion Healthcare could thrive, sources said.
Exit: Elsewhere, Advent International this morning has a big exit.
The firm has agreed to sell Distribution International to TopBuild in an all-cash transaction valued at $1 billion. DI, a mechanical insulation distributor, has grown its revenue under Advent by more than 50 percent to approximately $747 million for the TTM ended June 30, on a pro forma basis.
Growth was achieved via a multi-pronged playbook, it appears. The company expanded into new product categories, including metal building insulation, broadened its end-market focus in areas such as marine and data centers, and developed leading digital tools for its customers, Advent said. A total of 11 acquisitions were also completed during its investment.
That’s it! Have a great week ahead, and as always, write to me at firstname.lastname@example.org with any tips, comments or just to say hello!