Private equity managers have a reputation for taking companies started by someone else and growing them beyond the limits of what the original founders could have accomplished.

But some firms are comfortable taking a bit of that entrepreneurial mindset into their own deals. Francisco Partners, for example, launched specialty pharmacy Trellis Rx in 2016, representing the firm’s third “ground up” investment. Francisco sold the company last year to pharmacy services provider CPS Solutions in June, reaping a chunky return (23.8x gross, according to sources) and winning our mid-market deal of the year.

For Francisco, “ground-up” is terminology it uses to describe a company it founded itself. Founding a company requires a different skill set than buying a mature business, according to Chris Adams, a partner at Francisco. The manager makes three considerations before deciding on proceeding with a “ground-up.”

“First, we build conviction in a market. Second, we must have a founding team we want to work with. Third, we must have a solution we think can get unusually big unusually quickly. If those things come together, we’ll take the final step and start a company if we really understand a space and see a solution that does not currently exist in the market,” Adams says.

“It’s a hard system to navigate. The idea we had for Trellis was to do what we can to make it easier for all parties to navigate the system and give and get access to medications”

Chris Adams, Francisco (with Francisco colleagues Victoria Shih and Kevin Wei)

The manager’s history working at the intersection of tech and healthcare allowed it to see a major gap in how patients receive medications and treatments prescribed by doctors – especially those who belong to health systems.

For example, a doctor may prescribe a patient medication for a complicated procedure. A retail pharmacy might not carry the drug. The patient may then have to wade through the complicated bureaucracies of insurance companies or mail order pharmacies to obtain the medication.

“It’s a hard system to navigate. The idea we had for Trellis was to do what we can to make it easier for all parties to navigate the system and give and get access to medications,” Adams says.

At the same time, many health systems have struggled since the covid-19 health crisis. Connecting patients, their health systems and access to badly needed medications was a problem in need of a solution, Francisco found.

From there, Francisco Partners brainstormed what became Trellis Rx – a specialty pharmacy that partners with health systems to make it easier and cost-effective for patients to receive the medications and treatments they need.

Finding the team

To make Trellis Rx happen, Francisco had to find the right executive team to launch and grow the company. That meant relying on the firm’s long-developed contact list of executives it worked with previously or have wanted to when the time was right.

“That’s a big piece of our overall business model. I spend a large portion of time getting to know executives that may be able to help companies,” Adams says.


Gross returns on the deal, according to sources


Year Francisco Partners founded Trellis Rx


Number of employees Trellis Rx works with today across 17 health systems

Trellis Rx began recruiting its management team and board of directors in 2016. In 2017, the company named Andy Maurer as its CEO and the company landed its first customer.

Trellis Rx grew its leadership team and developed a few key measures to create value. Key steps included launching a chronic disease management program to supplement its core business, accelerating its pharmacies’ path to accreditation and developing and improving its proprietary software.

But at the core of the firm’s decisions was the mantra that Trellis Rx was a badly needed guide to a labyrinthian system. The company focused on an on-site staffing model to differentiate itself from other competitors to meet that goal.

“Nobody gets into healthcare to get bad outcomes for patients. Everyone gets into healthcare because they want to help people get better. But the healthcare system creates barriers preventing that from happening,” says Adams.

At exit, Trellis Rx operated specialty pharmacies at 17 health systems and had 218 employees.

The sales process for a “ground-up” also differs from a typical buyout deal, according to Adams.

“We’re starting at an earlier point. But when we’re looking to sell, we need to look like other businesses. It may take us a little longer to get there. But we’re no longer thinking about this as a business that’s just getting started. Now we’re selling a business that has been in existence for a few years.

“It requires a little longer-term timing,” Adams says.