Target: Physicians Endoscopy LLC
Sponsor: Silver Oak Services Partners
Seller: Navigation Capital Partners
Financial Adviser: Seller: Edgeview Partners
Legal Adviser: Sponsor: Kirkland & Ellis LLP; Seller: Katten Muchin Rosenman LLP
The firm didn’t disclose terms of the deal. Madison Capital Funding, an equity investor in Silver Oak Services, provided senior financing. Silver Oak Services typically invests between $15 million and $30 million in companies generating revenue between $15 million to $150 million and EBITDA of $5 million to $20 million.
The deal provided an exit for Atlanta-based
Navigation Capital Partners still holds about 20 portfolio companies it acquired in the Mellon Ventures deal. The firm is investing from a $125 million vehicle provided by Goldman Sachs Vintage Funds.
Physicians Endoscopy managed six surgery centers when Mellon Ventures acquired it in January 2004. Navigation Capital decided to exit because it had succeeded in expanding the company during a typical hold period, said Eerik Giles, a partner and co-founder. Giles declined to discuss the firm’s return on the deal.
Silver Oak Services was drawn to Physicians Endoscopy in part because it believes more medical procedures such as colonoscopies will be performed on an outpatient basis, said Dan Gill, a managing partner. Physicians Endoscopy, based in Doylestown, Pa., partners with gastrointestinal physicians nationwide to develop freestanding ambulatory surgery centers. The company provides management services for its partner centers and maintains a minority ownership stake in each project. It operates 14 centers. The LBO firm is now looking to open new surgery centers and make add-on acquisitions.
As its name implies, Silver Oak Services concentrates its investments in the services side of a variety of sectors. Its investment team will typically look for services-related deals within eight to 10 different sectors, including business services, health care services and consumer services, Gill said.
Silver Oak Services did its first deal in December 2006, recapitalizing VeriClaim Inc., a Naperville, Ill.-based outsourcer of insurance claims services. The LBO shop went on to do one add-on for VeriClaim. In June, it sponsored a recapitalization of Convergent Resources Inc., an Atlanta-based company that provides accounts receivable management services to businesses in the health care, utilities, telecommunications and financial services industries.
Silver Oak Services is in the market raising its first fund. So far, the firm has accumulated $75 million in commitments and is targeting $150 million, according to Thomson Reuters data. Gill declined to discuss the fundraising.—B.V.