Advent Recaps Medical Imaging Company –

Advent International gained a 60% stake in medical imaging services provider American Radiology Services (ARS) by providing the equity in a $115 million recapitalization completed March 28.

Advent paid $35 million from Global Private Equities Fund IV. Bank of America led the debt financing, which included Merrill Lynch Capital, General Electric Capital Corporation and BNP Paribas.

Founded in 1997, ARS has 670 employees employed at 26 facilities (12 are self-owned), and revenue topped $100 million in 2002. “Revenue has doubled [since the end of the first year of operation],” said Bob Taylor, a partner with Advent. “The aging population should provide us with organic growth of about 8% to 10% per year.” Taylor was referring to opening new offices without buying pre-existing clinics, but growth through acquisition is an option, he said.

Taylor said Advent looked at four companies in its search to acquire a company in the medical imaging services sector, choosing ARS because of its “efficacy of new technologies and some of the best radiologists in the U.S.”

Aside from Advent’s stake in ARS, the remaining 39% is divided between Johns Hopkins University and ARS management, the latter whose desire to retain a minority stake made the deal possible. Approached by a strategic suitor aiming for a 100% takeover, the five ARS founders declined, then turned to an investment bank for assistance in searching for alternative buyer. Johns Hopkins owns an undisclosed percentage of ARS.

“We were introduced by Adams Harkness & Hill and when we proposed a deal that allows the founders liquidity and the control of their own destiny, [management] agreed,” said Taylor.

This is the second deal in 18 days for Advent. On March 10, Advent acquired Denmark’s second largest furniture retailer, ILVA, for approximately $100 million. Debt for that deal was provided by the Bank of Scotland.

ARS provides diagnostic imaging services in the Mid-Atlantic states and services include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), ultrasound, x-ray and mammography though outpatient centers and in-patient hospitals.