L.A. Shop Squeezes Return Out Of Orthodontic Co.

Los Angeles-based buyout firm Celerity Partners and co-investor Ampersand Ventures turned to a strategic buyer for their recent exit of Ortho Organizers Inc., a company that makes brackets and other orthodontic products.

Henry Schein Inc., a Melville, N.Y.-based provider of health care products and services, agreed to acquire Ortho Organizers on March 9. In its statement announcing the deal, Henry Schein said Ortho Organizers, which is headquartered in Carlsbad, Calif., has roughly 200 employees, including 20 sales representatives, and that its sales totaled about $30 million in 2008.

Financial terms of the acquisition, however, weren’t disclosed, although Mark Benham, managing partner at Celerity Partners, told Buyouts the firm scored a 1.2x return on its investment.

Benham suggested that macro economic trends had posed some challenges to the company, given that orthodontia is a discretionary expense, but he declined to discuss specific financials. “With a consumer based product company in healthcare we were happy, in the current environment, to recover cost and a bit of a premium,” Benham said.

The original purchase of Ortho Organizers occurred in August 2005, and the combined equity investment of the two firms at that time was about $10 million, according to Steve Adamson, also a managing partner at Celerity Partners. He added that Ampersand Ventures provided about 75 percent of the equity to Celerity Partners’s 25 percent. Adamson also disclosed Celerity Partners stands to return more through earnout provisions the firms negotiated with Henry Schein, assuming Ortho Organizers meets the performance hurdles.

, general partner at Ampersand Ventures, did not return calls seeking comment.

Ortho Organizers marks the second exit of the past six months for Celerity Partners. In September, the firm earned about 3x its invested capital when it sold Synteract Inc., a contract research organization, to Gryphon Investors, a San Francisco-based buyout shop. Celerity Partners is now reportedly prepping its fourth fund, with a target of $250 million. It closed its previous fund, the $250 million Celerity Partners III LP, in 2002.

Celerity Partners targets late venture, growth equity, buyouts, divestitures and recapitalizations of mid-market companies. Sectors of interest include manufacturing, consumer service businesses, information technology, life sciences, and health care. The firm seeks to invest in companies with annual revenue of at least $10 million or more and EBITDA between $2 million and $20 million, and with a growth rate of more than 10 percent annually. Benham founded the firm in 1995.

Ampersand Ventures, based in Wellesley, Mass., invests exclusively in the health care and industrial sectors and places an emphasis on later-stage growth equity targets. It’s seeking $400 million for its latest fund, Ampersand 2008 LP, but it’s yet to hold a close, according to Thomson Reuters data.