Carousel Scans Imaging Space For Deal –

At the start the decade, buyout firms continue to be attracted to the steady growth found in the healthcare sector. Carousel Capital is just the latest firm to make its entrance into the space. Earlier this month, the Charlotte, N.C.-based firm finalized the acquisition of Soteria Imaging Services, an owner and operator of 24 imaging centers throughout the South and Midwest. Terms of the deal were not disclosed.

Since the start of 2003, a number of buyout shops have placed bets on the diagnostic imaging space, including TA Associates, through the buyout of One Call Medical, Parthenon Capital, in the purchase of Med-Tel International, Trivest Partners, with the acquisition of Regional Diagnostics, and Advent International, which gained a 60% stake in American Radiology Sevices through a recap.

Diagnostic imaging is a broad classification encompassing services such as X-Rays, MRIs (magnetic resonance imaging), PET (positron emission tomography) services and other non-invasive techniques used to scan the interior of the body.

In most cases, the firms that have invested in the imaging niche point to the aging population and the inherent growth of the customer base as one of the drivers that make these deals so appealing. Further, the applications in which patients can use diagnostic imaging are increasing as well, giving the space another area to achieve organic growth. And finally, private equity firms, true to nature, are drawn to the fragmentation seen in the overall market for diagnostic imaging.

“What really distinguishes Soteria from the others is its focus on the mid-sized markets. They’re the leading players in the second- and third-tier cities in the regions they cover, and they’ve managed to avoid the competition common in the major metropolitan markets,” said William Hobbs, a partner with Carousel.

In addition to harnessing the inherent growth of the sector, Carousel intends to enhance Soteria’s growth through a number of internal initiatives. “The company will continue to introduce additional capabilities, and we’ll fill out some of the centers that Soteria has opened up recently. We’ll also look to acquire or develop new centers within the regional clusters that Soteria is already operating in,” said Hobbs.

Hobbs would not disclose any of the deal’s terms other than to say Carousel’s investment fits within the firm’s typical equity range of $10 million to $30 million. Allied Capital provided a mezzanine tranche to support the deal and the company has an existing debt package that will remain untouched. Carousel used equity from its Carousel Capital Partners II fund, which will likely only have enough capital for either one or two more deals, according to Hobbs. He added that the firm has yet to start fundraising but could look to do so early next year.