A Wednesday announcement revealed that North American Partners in Anesthesia, a portfolio company of American Securities, agreed to buy American Anesthesiology from publicly-traded Mednax. The structure of the pending transaction is interesting for a couple reasons. Although Mednax will receive a small upfront consideration of $50 million in cash at closing, one of four transaction components is an earnout based upon the “multiple of invested capital returned to NAPA’s owners [American Securities] upon exit of the investment.” In other words, as opposed to the seller receiving a contingent consideration tied to the business’s future performance, the earnout is tied to American Securities overall success on NAPA — a platform it backed about four years ago. More specifically, the 8K disclosed that Mednax will begin to receive a payment at an exit multiple of 2x, with its economic interest valued up to as much at $250 million should the PE firm’s return reach 5x. Another unusual component of the deal is Mednax’s immediate cessation of cash losses related to American Anesthesiology.
Read the full article: Unusual Deal Terms: Mednax Hands over Anesthesia Biz to American Securities Platform //
Source: https://link.pehub.com/view/5cffc7063f92a437256327c0c1yxg.ctd/aabe6aa8