In this special crossover edition of Across the Table, we're excited to republish an insightful episode from our sister podcast, Deal-by-Deal. Host Greg Hawver talks to fellow McGuireWoods partner Holden Brooks about antitrust considerations for private equity investors in the middle market (and, interestingly, the lower middle market).

They begin by discussing the Hart-Scott-Rodino Act, which requires pre-close filings for deals valued above $111.4 million that also meet certain other criteria — and note that some add-on strategies and other deals below this threshold may be subject to investigation by the Federal Trade Commission or Department of Justice if there are antitrust concerns.

Hawver and Brooks also discuss FTC v. U.S. Anesthesia Partners and Welsh Carson, a lawsuit that highlights the importance of assessing one's own acquisition conduct, being precise and accurate in communications and documents, and involving antitrust counsel in the pipeline stage of deals.

Join us as we bridge the gap between Across The Table and Deal-by-Deal, bringing you the best of both worlds under the roof of McGuireWoods.

Name: Holden Brooks

Title: Partner, McGuireWoods

Speciality: Holden is a partner in the firm’s Antitrust, Trade and Commercial Litigation Department, where her practice focuses on mergers, complex litigation, civil and criminal enforcement, and counseling across several industries with significant experience in the area of healthcare.

Connect: LinkedIn 

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

On this episode of Across the Table, host Kayla McCann Marty is joined by Alexis Rathborne, Managing Director of Investments at Trident for a discussion on the healthcare market and the investment thesis driving Trident’s team. Alexis explains how she applies Trident’s investment thesis – that identifying the right investment and operating partners is key to successful acquisitions – to the specialized physician investments she reviews.   For Alexis, the right deal is all about finding the right asset within those specialties and the right partners to work in those sub-industries.

This approach reflects Trident’s belief that their operating partners–including CEOs, physician partners, and others on the ground–are just as important in driving their success as anything else, and they have no problem sharing credit with them.

Throughout the episode, Alexis shares insights into popular sub-sectors of healthcare investing that have interested the Trident team, along with some of the current challenges involved in making an acquisitions deal. She and Kayla also share the opportunities they see in the market and what they anticipate looking ahead. 

Name: Alexis Rathborne

What she does: Alexis Rathborne is a Managing Director of Investments at Trident. Since joining Trident in 2019, she has been instrumental in executing Trident’s investment thesis. Prior to Trident, Alexis led direct investing at Clear River, a single-family office in New York City, with a focus on restaurant investments.

Organization: Trident

Connect: LinkedIn 

Top takeaways from this Across the Table episode 

• Having the right asset and partner makes an investment interesting. According to Alexis, Trident is interested in the optometry space due to the level of unconsolidated practices and the quick synergies that can be exercised in the industry.
• Independent sponsors bring unique strengths. Working with operating partners or independent sponsors can help you find unique investment opportunities that are off the beaten path and not banked.
• Valuations have been challenging in healthcare. With tightening debt markets requiring either lower valuations or larger equity investments, valuing acquisitions has been challenging. COVID has also affected practices differently, and there has been a disconnect between valuations and intrinsic value.

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the...

When leading a company, few things are as important as building a strong team and empowering those team members, according to Matthew Pettit, founding partner of Seven Hills Capital.

Before Matt formed Seven Hills Capital, he founded and worked as CEO of another successful business, Ascend Dermatology. His goal was to create an organization that provided top-tier compassionate care to dermatology patients and to offer a unique succession planning vehicle for practice owners. With that expertise under his belt and his prior experience as a healthcare private equity investor, Matt took his skill set and started Seven Hills Capital, an operator centric private equity firm focused on the healthcare industry.

On this episode of Across the Table, host Alyssa Campbell speaks with Matt about successful strategies he and his team have used to address staffing challenges, how acquisition growth strategies have shifted in a post-COVID world, and his emphasis on positivity in the workplace.

Name: Matthew Pettit

What he does: As the founder of Seven Hills Capital, Matthew is focused on building the best in class healthcare services companies. Matthew set out to create a long-term operating perspective to healthcare services investing.

Organization: Seven Hills Capital

Connect: LinkedIn

Top takeaways from this Across the Table episode 

• The key to retaining employees comes down to good recruitment and good treatment. Matthew credits Seven Hills Capital’s partner companies' skilled recruiters with creating positive work cultures and articulating the company’s goals to prospective employees. Their partner companies provide health benefits and compensations competitive with larger companies, and for back-of-house employees, it also provides in-house daycare and hybrid work-from-home options.
• Sometimes, you need to take conversations to the front end. When approaching the close of an acquisition process, it’s important to talk to the actual providers. Matthew attributes this to the large spread between buyers and sellers, as well as a tightening market in which cash flow becomes more important.
• A company is only as good as its employees. Matthew operates under the notion that the right partners will positively impact, change, and drive culture. He believes if you empower employees to grow the way they want, the practice will thrive.

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast,...

On this episode of Across The Table, McGuireWoods partner Alyssa Campbell is joined by Colin McDermott and Savanna Ganyard of VMG health for a discussion of the publicly traded healthcare operator’s Q1 earnings reports, along with expectations for the rest of 2023. They also touch on whether today’s investment climate reflects a return to typical healthcare acquisition trends or if we’re entering a new post-pandemic era.

Public sector earning reports didn’t indicate any new trends across the industry as a whole for Q1, most of the notable trends were sector or company specific. 

According to Savanna, the valuations during this earnings season have been interesting. Colin echoes these observations, noting that, “as we see multiples trend down in the public sector, even slightly, that's going to compress what their [buyers] are willing to pay for private companies.”

VMG Health regularly follows 23 publicly traded healthcare operators so they can provide their clients with industry expertise. Each quarter they produce a one-page earnings summary with quotes on major themes. This information was made publicly available to all clients last year due to high interest, especially following COVID. The summaries can be found here.

Name: Savanna Ganyard

Organization: VGM Health

Connect: LinkedIn

Name: Colin McDermott

Organization: VGM Health

Connect: LinkedIn

Top takeaways from this Across the Table episode 

• Q1 earnings reports varied by company and by sector. Of the healthcare companies VMG follows, 15 had positive revenue surprises and 12 had positive EBITDA surprises this quarter, with no major industry-wide trends. Valuation multiples remained flat or decreased slightly, and EBITDA decreased for half of the companies, indicating more sector or company-specific than industry-specific trends.
• This earning season has driven an interesting commentary on valuations. Companies that VMG is following have indicated they may be focused on targeting smaller companies and smaller deals compared to past years.
• Buyers are resetting purchase prices more quickly than sellers. This may result in an unwillingness to sell, or broken deals when prices must be reset. Private transaction pricing changes tend to be reflected more slowly, causing tension between buyers cautious with their investments and sellers who want to stick to their pricing.

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Honesty and trust are two of the most important elements of any strong relationship. The same is true for the business relationship between private practice physicians and investors, according to Andrea Balogh who joins host Kayla McCann Marty for this episode of Across The Table.

Andrea is the Chief Growth Officer and Chief Legal Officer at Integrated Oncology Network (ION), where she’s responsible for developing and executing the company’s growth strategy. She also spearheads ION’s business development, market strategies, and marketing and payer strategies teams. 

With more than a decade of experience in the healthcare private equity industry, Andrea believes three behaviors are essential to successful partnerships: open conversation, physicians and payers staying in (and respecting) each others’ lanes, and the alignment of goals and practices.

Tune in to the episode to learn how to develop strong partnerships and how investors can optimize their business relations and track trends in healthcare. 

Name: Andrea Balogh

What she does: As the Chief Growth Officer and Chief Legal Officer at Integrated Oncology Network, Andrea is responsible for creating and executing ION's growth strategy across the United States, as well as leading their business development, market strategies, and marketing and payer strategies teams. 

Organization: Integrated Oncology Network

Connect: LinkedIn

Top takeaways from this Across the Table episode 

• There are three ingredients to a successful acquisition. At ION, Andrea emphasizes the value in physicians having a close, community-based environment where they can deliver care at the right time and place. 
• Honesty is the best policy. There is no better business practice than honest, open communication.
• The future of the private healthcare equity industry is shifting. Take note of the move toward comprehensive care in the independent practice setting and how it is shifting to larger scale practices and partnerships.

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Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

In a “post-COVID” world, specialty care centers are trying to keep up with the ever-changing landscape of the healthcare market. 

On this episode of Across the Table, host Kayla McCann Marty talks with Kyle Lynch, a Group Vice President of Development at SCA Health, which is part of OptumCare and is a leader in specialty care, practice management solutions, and outpatient management. Through his work at SCA Health, Kyle leads the acquisition and new partnership activity in the physician practice and practice management space. 

Kyle discusses the company’s trend tracking, following how the market has changed since the beginning of COVID-19 and its prioritization of forming genuine partnerships that have longevity beyond the first five years. 

Tune in to learn about trends in the current market, how SCA Health tackles MSOs, and the hopeful turn toward a more care-centric model in specialty health.

Name: Kyle Lynch

What he does: As the Group Vice President of Development at SCA Health, Kyle Lynch leads the acquisition and new partnership activity in the specialist physician practice and practice management space.

Organization: SCA Health

Words of wisdom: “We [at SCA Health] are much more oriented around creating genuine partnerships where we can support practice operations and deliver our unique strategic value while preserving true physician practice autonomy.”

Connect: LinkedIn

Top takeaways from this Across the Table episode 

• Genuine partnership is a must. Kyle and the team at SCA Health is focused on creating genuine partnerships in which they can provide their unique strategic planning while preserving the practice’s operations and autonomy. 
• There’s a different way to think about MSOs. At SCA Health, MSOs are unrestricted. The MSO equity is almost immediately returned as a stream of constant income for shareholders.
• There is so much value in specialty practice spaces. Kyle explains the flow of value that can be utilized and monetized for the benefit of independent specialists. He believes SCA is perfectly positioned to capitalize on that for the sake of its clients.

Connect with us on Facebook, Twitter, Instagram, YouTube.

Subscribe to Across the Table in your preferred podcast app so that you never miss an episode. 

This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.

Paul Barrett isn’t afraid to get in the weeds to help an entrepreneur in the healthcare industry fulfill their vision. He and his team at Argosy Healthcare Partners pride themselves on seeking out organizations with smaller EBITDAs.

The way Paul sees it, both sides win with this approach. Argosy avoids the stiff competition that comes with high-worth companies; and the lower middle market companies Argosy pairs with are able to forge ahead with more capital support. 

That said, Paul knows it’s not always easy to buy and build a relatively small company. But it pays off, he insists. 

“It’s super important for us to find the right business and quality of founder, and we can do a lot of that from due diligence,” Paul says in this episode of Across the Table. 

“We can build a personal relationship with the founder who is looking for capital to execute on acquisitions, or to clean up their cap table, or are just ready to grow a little more quickly.” 

Paul is always keeping an eye on interesting areas in the healthcare world — which are not hard to come by these days. Thanks to the pandemic, evolutions in medical science, and a quickly aging population, there is plenty for a creative capital provider who really wants to make a difference to watch out for. 

Tune into the episode to hear more about Paul’s business strategy at Argosy Healthcare Partners, and what he thinks about the future of funding in healthcare entrepreneurship.

Name: Paul Barrett 

What he does: Paul is a managing partner at Argosy Healthcare Partners, where he works in fund management, developing, assessing and strategizing on investment opportunities.

Organization: Argosy Capital 

Words of wisdom: “We focus on the small stuff. That's a key part of our thesis and strategy in trying to differentiate ourselves in a super-competitive market.” 

Connect: LinkedIn

Top takeaways from this Across the Table episode

★    Smaller EBITDA means less competition. Venture capital is very competitive, especially in the lucrative healthcare industry, and especially over companies with a high EBITDA. Instead of constantly fighting to source deals, Paul and his team look at companies with smaller EBITDAs that they can help grow.

★    Don’t back away from less sophisticated founders — but set boundaries. Argosy’s strategy of investing in lower middle market companies means the firm often deals with boards and founders who aren’t necessarily well-versed in the business world. This allows for a really hands-on approach to buying and building a company, but requires tougher work from the jump. Paul does set limits: He and his team don’t work with companies with founders who are retiring, and EBITDAs under $1 million. There is a limit to what they can do.

★    Pay attention to subsectors and trends. Argosy Healthcare Partners is passionate about supporting companies in specific subsectors of the healthcare industry, for example healthcare staffing and post-acute care. Pay attention to social and cultural trends — as well as events like the COVID-19 pandemic — that change the landscape and determine which subsectors have the potential to heat up.

[1:26] How it began: Paul talks about Argosy Capital’s 30-year history of

As a private equity borrower in the ever-changing healthcare field, you have leverage in your deals with lenders.

Penny Zacharias, Clayton Stallbaumer, and Ying Hsu are all partners in McGuireWoods’ debt finance group. They regularly work on sponsor-backed lending transactions in the healthcare space, and are particularly familiar with the borrower side of the equation.

To these experts, if you’re a private equity borrower in this field, the most important tool at your disposal is communication — and staying organized.

“Look at the long-term and think of this as a relationship,” Clayton says. “We've seen private equity firms and their portfolio company borrowers have a lot of success when they frame their communications in a way that is honest, but benefits them.”

If you are looking for funding in an innovative field like healthcare, you’ll want to be able to feel like there’s room for change. Better communication at the outset of the credit facility will enable more flexibility down the line.

And have a system for all those documents. Ying says that organizations doing complex healthcare deals should make sure they have all their paperwork together, and get all the needed signatures in advance where possible, so they can get the deal passed efficiently. There should be no surprises the night before you close.

Tune into the episode to hear from these debt financing professionals about how you can form great relationships with your lenders and keep your finger on the pulse of the borrowing landscape, to make sure you’re getting the best deal.

Name: Penny Zacharias

What she does: Penny is a partner in the debt finance group at McGuireWoods, where she draws on her 15 years of legal experience to represent financial institutions in a broad range of lending transactions. She is also the co-chair of the company’s Women in Private Equity & Finance Initiative. 

Organization: McGuireWoods

Words of wisdom: “Thinking of your lender as a partner will afford a greater level of flexibility in negotiating from the outset.” 

Connect: LinkedIn

Name: Ying Hsu

What she does: Ying is a partner in the debt finance group at McGuireWoods, working in ABL and healthcare. She also serves as the deputy co-chair of the Women Lawyers Network of McGuireWoods’ Chicago office.

Organization: McGuireWoods 

Words of wisdom: “Nothing beats being hyper-organized about closing deliverables when it comes to making the process go as smoothly as possible.” 

Connect: LinkedIn

Name: Clayton Stallbaumer 

What he does: Clayton is a partner in the debt finance group at McGuireWoods, representing agents, lenders, borrowers, private-equity firms, and debt funds in a range of lending transactions. 

Organization: McGuireWoods

Words...