Baird wrapping Fund V with eye on health

Michael Bernstein, partner at Baird Capital, told Buyouts the 2010 vintage Fund V has enough remaining capital for two more platform deals, which may be healthcare.

“Our areas of focus in healthcare are all Affordable Care Act-driven opportunities,” said Bernstein, who is betting that Obamacare will remain in place.

Baird is shopping in four areas for companies of $5 million to $15 million in EBITDA: businesses that cater to hospital or health provider efficiency; alternate care specialists, such as outpatient treatment centers; outcomes medicine specialists to help accountable care organizations manage risk; consumer-driven health care companies such as Myelin Health, a specialized advertising firm for hospitals that currently is in Baird Capital’s portfolio.

While LBO prices remain expensive, Bernstein said the buyout industry has pent-up supply from portfolio companies nearing the end of their lives in funds after missing some of their growth targets because of the 2008-2010 recession.

“You’re going to see a lot of 2006 vintage funds with portfolio companies that are still nowhere near their original investment theses but will be monetized, and they’ll probably be sold to other private equity firms (because)…they’re hitting the twilight of their holding period,” Bernstein said. “Next year you may see a busy year for deals.”

Some of the deals may not be “classic beauties” but could offer value after breaking out the effects of the recession and looking at the core business, he said.

On the exit side, Baird Capital is selling its portfolio company MedData Inc, a provider of revenue management services, to publicly traded Mednax Inc, a national medical group, for an undisclosed sum. The deal was announced on Aug. 18.

Bernstein met with Buyouts at the New York Palace hotel during the Baird Health Care Conference on Sept. 3 and 4 in New York City.

Baird Capital named Bernstein as a partner in June with a focus on the healthcare sector after he worked for the firm in a variety of roles. He first joined Baird Capital in 2008 as an executive-in-residence, and was named CEO of portfolio company Medical Education Technologies Inc (METI), which was sold to CAE, a leader in simulated education.

Baird Capital, the private equity arm of Robert W. Baird & Co, employs 60 people across four funds focused on U.S. buyouts, Asia, Europe and venture capital.