Sumeru’s New PortCo Seeks Tech-Enabled Health Care Services Cos.


Price: More than $100 million

Sponsor: Silver Lake Sumeru, Essex Woodlands


Financial Adviser: Sponsor: PricewaterhouseCoopers; Seller: Raymond James Health Care Investment Banking Group

Legal Adviser: Sponsor: Kirkland & Ellis LLP, Perkins Coie LLP; Seller: Fenwick & West LLP

MEDSEEK, a provider of online services for hospitals and patients that Silver Lake Sumeru has agreed to acquire, is already in preliminary deal conversations with potential acquisition targets and has a list of “dozens” of potential add-on deals, a source close to Sumeru told Buyouts.

The mid-market investment arm of Silver Lake announced its acquisition of the company on May 10. Terms weren’t disclosed, but Buyouts has learned that Sumeru invested about $100 million in the all-equity transaction. Also investing in the deal were management of the company and Essex Woodlands Health Ventures, a venture capital and buyout shop that Sumeru invited into the deal because of its expertise in health care.

Founded in 1996, MEDSEEK provides hospitals and other health care organizations with software that helps them target and retain patients; it also provides online portals in which patients can interact with doctors and manage their care. The company has more than 200 customers representing more than 1,000 hospitals, according to a press release announcing the deal.

MEDSEEK is especially interested in buying companies that provide technology-enabled services to patients, such as software that helps diabetes patients manage their condition, to cite one hypothetical example. The source said the company has a target list of “dozens and dozens” of potential targets, adding that the company and Sumeru will be quite selective in what they pursue.

The other leg of MEDSEEK’s growth strategy under Sumeru is to increase its hospital customers and increase the number of products the company can offer those customers, the source said.

The deal marks the first time Sumeru or its large-cap colleagues at technology-focused Silver Lake have invested in a health care software company, though the firm has ample experience with information technology companies. Silver Lake’s portfolio does include health care services company MultiPlan Inc., which it and BC Partners bought in 2010 in a $3.1 billion deal, though that company provides transaction processing services as opposed to software.

Sumeru was also drawn to the way that MEDSEEK’s business taps into a larger macro trend in which health care providers are trying to cut costs and improve the patient experience through computerizing patient records and other aspects of health care.

“To stay competitive health care providers increasingly will need to enhance communications between care provider and patient and provide increased access to health care information and services online,” Sumeru Managing director Hollie Moore Haynes said in the announcement.

MEDSEEK is the latest platform investment out of Sumeru’s debut fund, which closed in 2008 with $1.1 billion in commitments. The firm logged its first full exit last October, generating more than 2x its invested capital in i2 Ltd, according to a source, when it sold the intelligence and investigation management software company to International Business Machines Corp.