1. Why did you recently hire Eran Broshy, the former CEO of inVentiv Health Inc., a business that helps pharmaceutical companies with everything from clinical staffing, advertising, regulatory compliance and cost containment, as a senior advisor?
We had targeted health care information as another leg to our stool because it’s such an amazingly fast-growing industry a few years ago. We’re focused on the media, telecom, and information services businesses. Then we drilled down more and said we need even more expertise. We have guy named Peter Wilde who focuses a majority of his time on information services in education and health care. He found Eran because you try to find the best CEOs in the business you can find. When you meet a bunch of them, usually there’s a click, and Eran clicked with us. A lot of times you find guys that come in and [they take] a long time getting up and running. He brought in four or five deals right off the bat.
2. You also recently invested in ikaSystems Corp., which provides Web-based automation services for health insurers. Does this signify a move into the health care sector?
This is probably our best example of how [senior advisors] help out. We would’ve never found ikaSystems without Eran. For 20 years, we’ve been doing old line media—broadcast TV, cable, newspapers—and we made a lot of money on that for our LPs. But we’re also focusing on digital media. Everything’s going from analog to digital. And you’re finding the same thing happening in health care, where information is so important and it’s going from analog paper files to the Web. And you have a lot of old legacy systems that can’t do things for a Blue Cross of Michigan or a health care system. We know we can make money in this industry, we just need to find the right deals. That’s where Eran came in.
3. What kind of a year is Providence Equity expecting?
We’re going to be back to investing. Last year we were pretty cautious, seeing what happened with almost financial Armageddon in 2009. I think we may have seen bottom. We’re very cautious about the economy going forward. We think it’s a jobless recovery. But we see some interesting deals and we have a bunch of term sheets out. I think you’ll start seeing us invest some meaningful dollars in what we think will be the right time to be investing.
4. About what sectors are you particularly excited?
Education has been a huge area of focus for us for the last six years and we’re starting to see the fruits of it. You wouldn’t think that education is in Providence’s sweet spot, but we actually have probably done more deals in education than any other private equity firm. Two of them we just took public—Education Management Corp. and Archipelago Learning. They’re two very successful deals for us. We have about six deals in education. With Archipelago, we have a fun way to help kids learn, and that company has grown through the roof. Education Management has 130,000 college students, of which 76,000 go to our flagship property, the Art Institute. There, kids are going for culinary, or Webeb animation, or IT, and they graduate with jobs people need. So education’s been a huge focus for us.
5. Providence seems to do a lot of co-investments. Why?
If you look at the 100 deals we’ve done in the last 20 years, I bet less than 20 percent are part of the big consortium groups. They just happen to be the bigger deals and attract the most attention.
Edited for clarity