What to expect in health care transactions in the coming year

Own a health care company and looking to sell? Times look good for you.

That was one of the takeaways from the Nashville Health Care Council’s annual “Financing the Deal” panel Wednesday, during which financial experts shared their take on the biggest trends in health care deal flow with more than 300 members of Nashville’s health care community.

“It’s a very robust market,” said Richard Harding, managing director of investment bank Moelis and Company. “It’s a great time to be a seller.”
Among other examples, panelists cited robust, growing M&A transaction volume, a red-hot IPO market and consistent double-digit multiples for deals as signs that the health care market, which was already plenty active in 2013, is continuing to accelerate and churn out big deals.
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Here are a few of more key takeaways from Wednesday’s event:
On reform and new payment models: Much of the discussion about the effects health care reform is having on the industry actually touches on issues related to, but separate from, the Affordable Care Act itself, said Chris Gordon, managing director at Bain Capital. While the ACA will provide some “predictability” for providers in terms of patient coverage, there are plenty of other exciting, interesting dynamics driving the market, including further investments in advanced technology and the emergence of accountable care organizations and other types of risk-bearing provider structures, Gordon said.

For now, Gordon added, it’s exciting to consider a future world with capitation, bundled payments or other outcomes-based payment structures, but fee-for-service is still the reality for now and the near future. To cope, companies need to find ways to prepare for new models down the road while still bringing in money now, Gordon said.
On sectors that are hot, and those that are not: When moderator Tom Wylly, senior partner at Brentwood Capital Advisors, asked panelists what industry sectors they’re most excited about, most discussed technology and other outsourced services as particular areas of interest. Joey Jacobs and behavioral health provider Acadia also got their usual shout-out for strong, proven performance, as Wylly and other panelists noted the company’s strong first-quarter earnings, released Tuesday, and Jacobs’ team’s track record of success.


Financial Experts Discuss Trends in Access to Capital for the Health Care Industry

Today, more than 300 Nashville Health Care Council members gathered to hear financial experts give insights on current and future trends in access to capital and first-hand perspectives on the state of the market, M&A activity and the outlook for funding the growth of Nashville’s $70 billion health care industry.

The “Financing the Deal” panel discussion was moderated by Tom Wylly, senior partner, Brentwood Capital, and included panelists James Forbes, vice chairman, UBS Group Americas; Chris Gordon, managing director, Bain Capital; Rich Harding, managing director, Moelis & Company; Grant Jackson, general partner, Council Capital; and Phillip Molner, managing partner, Primus Capital.

“Health reform has made controlling costs and quality of care a top issue for health care companies. As the industry reacts to regulatory changes, we anticipate active deal making for organizations that create efficiency and produce high-quality outcomes,” said Forbes.

“As the ACA continues to roll out, we expect increased acquisition activity and creative alliances between unlikely partners and industry sectors as a response to the changing needs of health care companies,” said Gordon.

“The ingredients exist for a robust health care services M&A market in 2014. Buyers and sellers continue to benefit from significant access to low-cost capital and strong public market valuations with now greater visibility into how health care reform will ultimately evolve.” said Harding.

“Small, fast growing health care companies represent an attractive market segment for investment, because they provide the innovation and nimbleness required to facilitate and enable the rapid pace of change occurring in health care.” said Jackson.

“We are particularly excited about technology-driven solutions that meet consumers and clinicians needs for rapid and useful data, while easily fitting into the care delivery model and controlling costs,” said Molner.

More than 250 health care companies have operations in Nashville and work on a multi-state, national or international basis. Thirteen publicly traded health care companies are headquartered in Nashville.

“Nashville’s rich entrepreneurial culture and strong management expertise creates opportunity for our diverse health care industry to grow and meet the needs of a rapidly changing industry,” said Council President Caroline Young.

About the Nashville Health Care Council
The Nashville Health Care Council, founded in 1995 as an affiliate of the Nashville Area Chamber of Commerce, is an association of health care industry leaders working together to further establish Nashville’s position as the nation’s health care industry capital. Worldwide, Nashville’s health care industry generates more than 400,000 jobs and $70 billion in annual revenue. The industry is Nashville’s largest and fastest growing employer. For more information on the Council, please visit www.healthcarecouncil.com.

About Brentwood Capital Advisors LLC
Brentwood Capital Advisors LLC, founded in 1999, is a privately held investment bank headquartered in Nashville, Tennessee, providing mergers & acquisitions and capital-raising advisory services to middle-market companies in the business services, financial services, information technology, and healthcare sectors. BCA has served as exclusive financial advisor in over 60 successfully closed transactions in these sectors, representing more than $4.0 billion in value. For more information, visit www.brentwoodcapital.com.


Why Brentwood Capital Advisors wants to bolster its tech business

While some in Nashville bemoan a lack of venture capital – especially in fields outside of the health care space – Franklin-based investment banking firmBrentwood Capital Advisors is confident investment money will start to flow in the region as the technology scene gains momentum.

To that end, the firm, which has traditionally focused much of its work on health care and health care IT companies, has added Cook Wylly as vice president to focus on a more diverse spectrum of technology companies.

Wylly, who comes to Brentwood Capital from Palo Alto investment firm Accel Partners, said part of his work in California involved scouting out regions ripe for investment as areas like California and the Northeast become saturated with technology businesses and existing venture capital.

Nashville seems to be following a pattern established by other newly formed hotspots, Wylly said – cultural buzz draws young entrepreneurs, who in turn build businesses that draw interest from investors.

Capital, Wylly said, “will follow the entrepreneurs,” adding that that sort of ecosystem “takes a long time to build.”

In a possible early sign of the progress Wylly noted, California venture services firm  Crestlight Venture Productions announced plans earlier this week to open a partner office here in Nashville.


Brentwood Capital Advisors adds VP

Brentwood Capital Advisors has added Cook Wylly as vice president.

Wylly (pictured) will advise BCA clients on, among others, enterprise software, cloud-enabled services, mobile technology and Internet services.

Previously, Wylly was an investor with Accel Partners in Palo Alto, Calif., where he sourced and helped lead growth equity investments in technology companies. Prior to his work with Accel, he helped lead investments in enterprise software businesses at Thoma Bravo in San Francisco.

“We are delighted to have Cook join our team,” Kevin Murphy, BCA managing partner, said in a release. “He brings deep software and internet industry expertise,  as well as solid transaction experience. Because a  significant portion of our clients are software or technology-enabled businesses, the addition of Cook to our team will accelerate our efforts to serve more businesses in these attractive, high growth sectors.”

Wylly started his career in the mergers and acquisitions and restructuring group at Greenhill & Co. in New York. He also spent time leading education technology investments at NewSchools Venture Fund, a venture philanthropy firm focused on innovating K-12 education, and as a consultant in East Africa with TechnoServe, an economic development consulting firm that works with entrepreneurs in poor areas of the world.

Wylly, a Nashville native, is a graduate of the McIntire School of Commerce at the University of Virginia.

“I couldn’t be more excited to … help lead BCA’s efforts in advising entrepreneurs across the technology landscape,” Wylly said in the release. “These high growth, rapidly evolving sectors will be great focus areas for BCA for years to come.”


BCA Adds Tech Banker

Brentwood Capital Advisors LLC (“BCA”) is pleased to announce that Cook Wylly has joined the firm as Vice President where he will focus on advising clients across a range of technology sectors, including enterprise software, cloud-enabled services, mobile technology and internet services.

“We are delighted to have Cook join our team,” said Kevin Murphy, Managing Partner at BCA. “He brings deep software and internet industry expertise, as well as solid transaction experience. Because a significant portion of our clients are software or technology-enabled businesses, the addition of Cook to our team will accelerate our efforts to serve more businesses in these attractive, high growth sectors.”

Prior to joining BCA, Cook was an investor with Accel Partners in Palo Alto, CA, where he sourced and helped lead growth equity investments in technology companies. Prior to Accel, Cook helped lead investments in enterprise software businesses at Thoma Bravo in San Francisco.

“I couldn’t be more excited to join the Brentwood Capital team and help lead BCA’s efforts in advising entrepreneurs across the technology landscape,” added Cook Wylly. “These rapidly growing and evolving sectors will be great focus areas for BCA for years to come.”

Cook started his career in the M&A and restructuring group at Greenhill & Co. in New York, and has also spent time leading education technology investments at NewSchools Venture Fund, a venture philanthropy firm focused on innovating K-12 education, and as a consultant in East Africa with TechnoServe, an economic development consulting firm that works with entrepreneurs in poor areas of the world. Cook is a Nashville native and a graduate of the McIntire School of Commerce at the University of Virginia.

About Brentwood Capital Advisors
Based in Franklin, TN. Brentwood Capital Advisors is an independent investment banking boutique specializing in providing mergers & acquisitions and capital raising advisory services to middle-market companies in the healthcare, enterprise software, internet, financial services, and business services sectors. BCA has served as exclusive financial advisor in over 60 successfully closed transactions totaling $4 billion in value in these sectors. Founded in 1999, the firm is partner-owned and has twelve investment banking professionals. For additional information please go to our website at www.brentwoodcapital.com.


Cornerstone Detention Products Acquires Norment Security Group

Brentwood Capital Advisors Serves as Exclusive Financial Advisor to Cornerstone Detention Products and Arranges $27.0 Million to Support the Transaction.

Brentwood Capital Advisors LLC recently acted as the exclusive financial advisor to Cornerstone Detention Products, Inc. (“Cornerstone” or the “Company”) in its acquisition of Norment Security Group (“Norment”) and assisted the Company in obtaining $27.0 million in debt financing led by Monroe Capital LLC.

Cornerstone is a leading provider of services and engineered detention products, furnished and installed, in the United States and Canada. Based in Madison, Alabama, the Company specializes in the engineering, design, distribution, installation and project management of institutional detention equipment and products for the jail and prison industries at the federal, state, county, private and local levels.

Norment Security Group is one of the oldest and most respected detention contractors in the industry, and the security group includes the brands of Airteq®, Trentech® and ECS®. Airteq® manufactures security locks, sliding devices, and door hardware. Trentech® and ECS® provide custom designed and fabricated electronic security systems. In addition, Norment is a leader in facility maintenance and service operations.

Cornerstone’s Chief Executive Officer, Mitch Claborn, remarked, “The complementary strengths of Cornerstone and Norment position us to emerge as the leading product and service provider in the industry. We were pleased to work with Brentwood Capital whose experience and skills played an important role in the successful combination of two industry pillars.”

“Cornerstone is a leader in the detention contracting and services market,” stated John Allgood of Brentwood Capital Advisors LLC. “The addition of Norment Security Group will expand Cornerstone’s capabilities and solidify its strong market position. We were pleased to serve as Cornerstone’s exclusive financial advisor on this transaction and enjoyed working with the Cornerstone team.”

About Cornerstone Detention Products, Inc.
Formed in 1998 by Mitch Claborn, Cornerstone has become one of the leading providers of services and engineered detention products, furnished and installed, in the United States and Canada. Cornerstone specializes in the engineering, design, distribution, installation and project management of institutional detention equipment and products for the jail and prison industries at the federal, state, county, private and local levels.

About Brentwood Capital Advisors LLC
Brentwood Capital Advisors LLC, founded in 1999, is a privately held investment bank headquartered in Nashville, Tennessee, providing mergers & acquisitions and capital-raising advisory services to middle-market companies in the business services, financial services, information technology, and healthcare sectors. BCA has served as exclusive financial advisor in over 60 successfully closed transactions in these sectors, representing more than $4.0 billion in value. For more information, visit www.brentwoodcapital.com.


Xtend Healthcare Completes Investment

Brentwood Capital Advisors Serves as Exclusive Financial Advisor to Xtend Healthcare, LLC

Brentwood Capital Advisors LLC is pleased to announce that it served as the exclusive financial advisor to Xtend Healthcare, LLC (“Xtend”), a leading national provider of revenue cycle outsourcing solutions to the hospitals, in its recently completed investment led by WestView Capital Partners (“WestView”).

Headquartered in Hendersonville, Tn, Xtend’s technology- enabled, accounts receivable management services offer an attractive value proposition for hospitals looking to outsource all or portions of their revenue cycle operations as well as supplement in-house capabilities. The Company provides a comprehensive range of outsourced services designed to maximize revenue and cash collections while controlling business office expenses for a diversified group of hospitals and hospital systems. With a longstanding reputation for best- in –class service, Xtend’s management team, led by co-founders Tom O’Neill and Howard Kirshner, has been assisting healthcare providers in meeting the challenges of revenue cycle management for over three decades.

WestView led the equity investment, which included a co-investment by Brentwood Capital Partners, L.P. Debt financing was provided by Abacus Finance Group, LLC and Crescent Direct Lending, LLC.

We have established our market-leading position by focusing on the diverse needs of each and every client and consistently delivering exceptional results. We are excited to partner with WestView to further support our next stage of growth.” said Tom O’Neill, CEO of Xtend. “Brentwood Capital Advisors, our investment banking advisor in this transaction, played a critically important role in conducting a highly competitive process that produced outstanding results.”

“Xtend has achieved impressive growth and operating performance since its formation in 2009 and is perfectly positioned to capitalize on the growing opportunities within healthcare for outsourced revenue cycle management services” added Tom Wylly, Senior Partner of Brentwood Capital Advisors. “Xtend has been rapidly expanding its workforce to address growing demand for its services. This transaction assists the Company in continuing to capitalize on significant growth opportunities”

About Xtend Healthcare, LLC Xtend Healthcare is a market leading provider of revenue cycle outsourcing solutions to the hospital market. The company’s services range from short-term, resource intensive solutions for temporary accounts receivable issues to long-term, full service, revenue cycle outsourcing. The Company’s client base encompasses both small, critical access hospitals as well as multi-hospital health systems. For more information, visit www.xtendhealthcare.net

About Brentwood Capital Advisors LLC Brentwood Capital Advisors LLC, founded in 1999, is a privately held investment bank headquartered in Nashville, Tennessee, providing mergers & acquisitions and capital-raising advisory services to middle-market companies in healthcare, information technology, financial services and business services. BCA has served as exclusive financial advisor in over 50 successfully closed transactions in these sectors. For more information, visit www.brentwoodcapital.com.

Westview Capital Partners WestView Capital Partners, a Boston-based private equity firm focused exclusively on lower middle market companies, manages approximately $1 billion in capital in three funds. WestView partners with existing management teams to sponsor minority and majority recapitalizations, growth, and consolidation transactions in a wide range of industries including healthcare services, business and technology services, software, industrial/manufacturing, and consumer/retail. WestView targets companies with operating profits between $3 million and $20 million with investment sizes ranging from $10 million to $50 million. For more information, please visit www.wvcapital.com.

About Brentwood Capital Partners, L.P. Formed in June 2009, Brentwood Capital Partners, L.P., is a $15 million private equity fund that makes later-stage co-investments with leading private equity firms in control and non-control investment banking transactions in which Brentwood Capital Advisors LLC serves as exclusive financial advisor. The fund’s limited partners are comprised of CEOs and business leaders from across the Southeast.