No one can accuse TA Associates of lacking patience. The Boston-based private equity firm recently consummated its seven-year courtship of One Call Medical Inc. by leading a $115 million buyout of the Parsippany, N.J.-based medical diagnostics outsourcer.
“We first called on the company in 1996, and periodically kept in touch with them ever since,” says David Lang, a principal with TA Associates. “It is not untypical for TA to actively call on companies that we feel have great prospects.”
Lang adds that the extended distance between contact and completion was primarily a matter of supply and demand. More specifically, cash-flush TA would have wanted to supply far more capital than a small, emerging company like One Call would have demanded.
“It was simply too small of an investment for us,” Lang explained.
So One Call looked elsewhere. First, it secured an undisclosed amount of angel funding and a small Series A preferred stock investment from EGS Securities Inc. Then, in December 1998, One Call completed a recapitalization with funding from Brown Brothers Harriman & Co.’s 1818 Mezzanine Fund. Today, the company is the acknowledged leader in its niche space, which made it plenty attractive to mid-market buyout firms like TA.
“There was a lot of interest in the company, and we are very pleased by how things worked out with TA,” says Kent Spafford, president and CEO of One Call.
The $115 million deal’s undisclosed equity tranche included cash from TA, plus the rollup of existing shares held by Brown Brothers Harriman and company management. TA also provided the deal’s subordinated debt portion, while senior debt came from Madison Capital and incumbent lender Healthcare Business Credit Corp.
TA’s Lang declined to say whether or not his firm expects to ultimately exit One Call via the public or private markets. He did indicate that the company might use some of its newfound capital to make acquisitions of its own.
“The company plans on being even more aggressive about its growth than it has been in the past,” he says. “The company has made one small acquisition in the past, but there are a number of interesting candidates in a highly-fragmented sector.”
This story originally appeared in Buyouts, a related publication.
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