A leading provider of enterprise software applications to community and specialty hospitals via a license/maintenance model. HMS was primarily owned by two founders and an ESOP, which limited ownership by current management.
Middle market, $275-million private equity fund focused on companies in the business services, healthcare and education industries.
HMS received an unsolicited offer from a financial buyer. BCA was asked to evaluate the bid and opined that the valuation was significantly below market based upon HMS’ strong market position and opportunity to improve profitability.
The founding and majority shareholders wanted liquidity but were not actively involved in day-to-day management and wanted no involvement or ownership post-closing.
BCA believed that a recapitalization would give a prospective financial buyer an opportunity to streamline governance by buying out the founders completely, reducing the ESOP’s stake and providing a stock option plan to incentivize current management, enabling them to build significant equity value and pay more for the Company today.
Because of the limited number of competitors serving HMS’ target market, conducting a process that maintained confidentiality without negatively impacting valuation was paramount.
Approached a small, highly-targeted group of private equity firms.
Assisted management in preparing investment materials that highlighted HMS’ strong market position, rapidly growing and actionable new business pipeline and opportunity for significant margin expansion with scale.
Received highly attractive bids from all the private equity funds participating in the process, including the firm that submitted the initial, unsolicited offer.
HMS completed a majority recapitalization led by Primus Capital.
Shareholders received a 40% premium to the initial unsolicited offer.
“We are a fast growing company with aggressive growth plans and had received inquiries from a number of interested parties. BCA conducted a highly targeted and competitive process that provided a new capital partner along with an attractive valuation and transaction for the HMS shareholders. BCA delivered senior-level attention and provided sound advice throughout the process.”
CEO Healthcare Management Systems