Psychiatric Solutions (“PSI”) operates inpatient behavioral healthcare services facilities in 35 states.
Leading middle-market private equity firms with offices in Connecticut and New York and over $6 billion in committed capital.
In 2002, PSI was transitioning from managing hospital beds under long-term contracts to owning freestanding, acute psychiatric hospitals.
PSI had an opportunity to buy a large hospital but needed external capital to fund the purchase.
Existing investors offered to provide equity capital to fund the transaction but that would have required PSI to give up a substantial majority ownership position in the Company with no capital for future growth.
BCA recommended raising subordinated debt as an alternative to equity funding. We believed PSI could raise significant funding without much dilution.
PSI raised $20 million in subordinated debt with an initial draw down of $10 million at a cost of 4% of the Company.
In 2002, PSI agreed to reverse merge and own a majority position in publicly traded PMR Corporation. This transaction would give PSI $5 million in additional cash and public stock currency to invest in acquisitions.
BCA was hired to help negotiate and structure the terms of the deal as well as provide a fairness opinion to the transaction.
In 2003, PSI hired BCA to explore various financing alternatives that would enable PSI to continue executing its acquisition strategy.
BCA recommended a PIPE transaction.
PSI received a minority investment of $25 million in equity, which helped position PSI as the leading consolidator in the behavioral health sector.
This series of transactions enabled PSI to evolve from a contract manager to an owner of acute psychiatric facilities and provided the initial capital to become the leading consolidator in the industry.
“We found Brentwood Capital to be a great partner when it came to our company’s mezzanine and equity finance engagements. Their commitment to PSI and the quality of the capital partners exceeded our expectations. Partnering with BCA has been a key to our success, and the capital raised was critical to the growth of our company. I would definitely recommend Brentwood Capital Advisors to a colleague. They were very knowledgeable throughout the process, from the beginning of our engagement to closing the deal.”
CEO, Psychiatric Solutions, Inc.