Healthcare IT Platform

A company in the Healthcare IT industry with $3 million in revenue and $.75 million in EBITDA approached Attract Capital to help them secure acquisition financing for their planned roll-up.  The owner wanted a lender that would fund based on his rollover equity value and not require significant cash equity to fund acquisitions. The company had a large amount of acquisition activity planned and needed the right lender to support their aggressive roll-up.  We structured the acquisition financing based on the future EBITDA of the Company and created a structure that could be drawn to support multiple acquisitions simultaneously.  

In the first part of this engagement, we raised a $8 million facility to refinance and fund acquisitions.  This increased revenue to $15 million and EBITDA to $2.5 million over a two-year period.  This was all accomplished through the lender’s capital without any cash equity investment by the owner. 

Despite the Company’s performance and successful acquiring, the lender wanted higher pricing.  We advised the client to replace them with a new debt structure consisting of senior debt and mezzanine debt.  This new structure reduced the cost of capital and provided a larger amount of funding for future acquisitions.  

In the second part of this engagement, Attract Capital raised a $21 million facility to refinance and fund five additional acquisitions, driving revenue to $30 million and EBITDA to $7 million.  We were very involved in helping the client execute their M&A strategy and build their relationship with the lender. We provided valuation advice, due diligence support as well as transactional support. We helped our clients convey their capital credibility with the Sellers.   The client also invested a portion of the funding into tech innovation which expanded their growth into new markets.  

Over this 7-year period, the client grew from $.75 million in EBITDA to $7 million, an increase of 9.3 times.  The Company’s equity value had increased from $2.5 million to $41 million, an increase of 16.4 times.  This equates to a 7-year ROI of 149% per annum.

Through our advice and financing solutions, the client became a market leader in its industry as one of the largest and most valuable healthcare RCM and IT companies, not owned by a private equity firm.  

In the third part of this engagement, we replaced the senior lender with another lender who was able to provide a $25 million facility.   The client executed two additional acquisitions and faster organic growth, driving revenue to $50 million and EBITDA to $9.5 million.    

In the fourth part of this engagement, we advised the client on their sale of the Company to a strategic acquirer at an equity value of $70 million within 1 year of the final debt raise.  The equity value of the company increased from $2.5 million on the inception of Attract Capital’s involvement to $70 million at time of exit, an increase of thirty times.

In total, Attract Capital raised $54 million in acquisition financing for this company over a 10-year period and advised on an equity exit of $70 million.