Sponsor: Halyard Capital
Seller: The Riverside Company
Financial Adviser: Seller: Berkery Noyes Capital Markets
Legal Adviser: Sponsor: Edwards Angell Palmer & Dodge LLP; Seller: Thompson Hine LLP
Terms of the deal were not disclosed. Halyard Capital typically invests $15 million to $40 million in its deals.
Marblehead, Mass.-based HCPro keeps hospital administrators and other health care providers up to speed on regulatory changes by publishing newsletters, magazines, books and seminars, among other media. It provides content Halyard Capital’s team expects health care providers will demand more of as the government continues to scrutinize the health care industry—especially if the Democratic Party, whose presidential candidates have made health care reform a central part of their platform, takes control of the White House and holds Congress. “I do think the health care arena will draw much scrutiny no matter which administration takes hold,” said Bob Nolan, managing partner of Halyard Capital.
Halyard Capital first looked at the company in 2002—when Riverside acquired it in a management buyout—but didn’t bid on it because it was primarily a newsletter distributor, said Michael Furey, a Halyard Capital principal. Since then, the firm has reviewed compliance information providers in real estate, financial services and other sectors, ultimately passing on these companies. Meanwhile, HCPro expanded its services across a variety of media. When HCPro returned to the auction block, the company had just what the Halyard Capital team was looking for: a business that provides proprietary content across multiple media. And the firm doesn’t expect recessionary headwinds to substantially curb HCPro’s business as much as they might in another sector.
HCPro is Halyard Capital’s first health care-related deal, though it does have experience with trade publishing through Pfingsten Publishing, a former portfolio company that publishes trade magazines and sponsors conferences for the art and framing, financial services and industrial sectors. The buyout shop has also looked at deals in the pharmaceutical industry and other health care-related business-to-business companies. In all, the Halyard Capital team looked at 50 potential deals related to health care and compliance information, Furey and Nolan estimated.
The firm is now turning its attention to finding companies that HCPro can acquire. Furey said it had targets in mind before Halyard Capital closed the HCPro deal, though he declined to name them or say how many targets the firm is eyeing.
GE Capital, Newstar Financial and CapitalSource provided debt financing for the transaction. Securing financing was not that difficult, as all of the lenders were familiar with HCPro, Furey said.
The exit of HCPro generated a 26 percent IRR for Riverside, earning it 3.4x invested capital, according to Graham Hearns, director of the firm’s marketing and communications.—B.V.