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Healthcare Private Equity Investors in the UK


An overview of the key UK healthcare private equity investors and what they look for in an investment.

Overview of healthcare private equity investment in the UK


Private equity investment into the UK healthcare sector remains strong, with appetite to invest into various segments of the market including clinical services, specialist care, medical products and digital health.


The sector's non-cyclical nature and resilience throughout pandemics and economic turmoil has made it increasingly attractive to investors, which has expanded the options available to business owners in the market.


Why should healthcare business owners consider private equity?


Private equity investment provides a flexible solution for healthcare business owners, which can be used to meet a range of objectives including:

  • Business owners extracting value in order to "de-risk" whilst maintaining an equity stake in the business to benefit from future growth;

  • An injection of funding in order to support the growth plans of the business;

  • Passing the business onto the management team by way of a management buy-out with the use of private equity funding.


What size of businesses do private equity invest in?


Lower mid-market private equity houses are generally focused on businesses with EBITDA in excess of £3m, however there is a growing range of investors covering the £1m to £3m EBITDA range.


Do private equity take a majority or minority stake?


Historically private equity houses were almost exclusively focused on majority equity stakes, but this has changed significantly over the last decade.


Whilst certain funds still insist on a majority position, most are now much more flexible and are willing to invest for a significant minority stake. As a result, healthcare business owners can take on private equity investment whilst maintaining majority ownership and control of the company.


Equity stakes taken by private equity generally range from around 30% up to full 100% acquisitions.


What do private equity look for?


Attractive business in a growing market


  • Stable or growing market with positive future outlook

  • Limited political or economic risk in the market

  • Differentiated business proposition to competitors in the market

  • Profitable, generating in excess of £1m EBITDA

  • Established business, with a track record of delivering growth over a number of years (i.e. not a start up showing exceptionally high growth rates over a short period)


Strong and investable management team


  • Private equity are fundamentally backing a management team to deliver a growth plan

  • It’s therefore essential that the management team is equally committed to the future growth of the business

  • Most management teams in private equity-backed businesses consist of a CEO, CFO and 1-2 further members (e.g. CCO, COO)

  • Private equity will generally appoint a Non-Exec Chairman to the board with relevant experience to support the broader management team

  • Where key members of the management team are not existing shareholders “rolling over” value, they are incentivised via “sweet equity”


Credible five year plan to deliver the required returns


  • Private equity deals are generally structured around an IRR of >20% and a money multiple of >3x over a 4-5 year period

  • A credible five year plan with granular forecasts is therefore key to underpin private equity’s investment

  • This includes an integrated financial model (P&L, balance sheet, cash flows), to support a formal business plan document

  • Preparation of these documents in advance of engaging with private equity is highly beneficial in ensuring the process is efficient

  • Due diligence will take place over the business plan and model from a commercial and financial perspective


Who are the healthcare private equity investors in the UK?


The UK has a highly developed and diverse private equity landscape. Some of the most prolific healthcare-focused private equity investors are as follows:


PE House

Website

Investment criteria

Agathos Management

Businesses valued up to £25m

Apiary Capital

Businesses valued £10m-£75m

Apposite Capital

Mid-market focus with a £200m fund

Archimed

Equity investments of €10m-€1bn

August Equity

Equity investments of £15m-£40m

Bestport Private Equity

Businesses valued £5m-£40m

BGF

Equity investments of £2m-£20m

Blixt Group

£1m-10m EBITDA businesses

Bridges Fund Management

Equity investments of £10m-£30m

CBPE

Businesses valued up to £150m

Elysian Capital

Businesses valued £20m-£100m

Foundation Investment Partners

Lower mid-market focus

G Square Capital

Businesses valued up to €200 million

Graphite Capital

Businesses valued £30m-£150m

Great Point Partners

Equity investments of $7m-$50m

Kester Capital

Businesses valued £10m-£100m

Key Capital Partners

Businesses valued £5m-£50m

LDC

Equity investments of £5m-£50m

Literacy Capital

£1m-£10m EBITDA businesses

Limerston Capital

Businesses valued £20m-£200m

Livingbridge

Businesses valued up to £300m

Lonsdale Capital Partners

Equity investments of £10m-£15m

MML

Equity investments of £10m-£70m

Mobeus Equity Partners

Equity investments of up to £20m

Palatine Private Equity

Equity investments of £5m-£50m

Phoenix Equity Partners

Businesses valued up to £200m

Queen's Park Equity

Businesses valued £15m-£80m

Rockpool Investments

Businesses valued £5m-£50m

SHS Capital

Equity investments of £10m-£40m

Sovereign

Lower mid-market focus

Synova Capital

Businesses valued £20m-250m

Vespa Capital

Businesses valued £10m-£75m

Waterland

Mid-market - broad range

Westbridge

Businesses valued £15m-£50m

YFM Equity Partners

Equity investments of £3m-£15m


How can Eclipse Corporate Finance help?


Eclipse has relationships with all key lower mid-market private equity funds in the UK focused on healthcare. Our relationships with these funds allow us to assess the most likely investors for businesses in different segments of the healthcare market.


We can then support you structuring a suitable deal and providing end to end advice for healthcare business owners going through a private equity transaction. This includes:

  • Preparation of a five year business plan and financial forecast;

  • Approaching and managing all dialogue/negotiations with private equity investors

  • Negotiating heads of terms with the preferred investor (including equity terms)

  • Preparation of the financial and commercial elements of a dataroom

  • Management and oversight of the due diligence process

  • Commercial input in to the sale and purchase agreement


If you are considering taking on private equity investment and are generating EBITDA in excess of £1m, we would be happy to prepare an illustrative private equity deal structure for you.


Please get in touch via info@eclipsecf.com for an initial discussion.


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