Tag: fairmount partners

Fairmount Partners Advises Analytical Graphics in its Pending Acquisition by Ansys

Amanda Nardi

Fairmount has worked with AGI as strategic and financial advisor for over two decades and served as financial advisor on the pending transaction.

Key Highlights

  • Ansys to acquire Analytical Graphics, Inc., a premier provider of mission-driven simulation, modeling, testing and analysis software for aerospace, defense, telecommunication and intelligence applications
  • The acquisition will expand the Ansys portfolio to enable users to solve at the chip level all the way to an entire mission
  • $700 million deal expected to close in Q4 2020 pending the receipt of regulatory clearance

Read more.

Fairmount Partners Advises Analytical Graphics in its Pending Acquisition by Ansys

Amanda Nardi

Fairmount has worked with AGI as strategic and financial advisor for over two decades and served as financial advisor on the pending transaction.

Key Highlights

  • Ansys to acquire Analytical Graphics, Inc., a premier provider of mission-driven simulation, modeling, testing and analysis software for aerospace, defense, telecommunication and intelligence applications
  • The acquisition will expand the Ansys portfolio to enable users to solve at the chip level all the way to an entire mission
  • $700 million deal expected to close in Q4 2020 pending the receipt of regulatory clearance

Read more.

Fairmount Partners January 2020 News

Amanda Nardi

Fairmount is one of the largest and most active M&A firms based in the Mid-Atlantic, with a national and international practice. Since 2003, the firm has completed more than 220 transactions throughout North and South America, Europe, Asia and Australia. Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context.

  • Fairmount Partners advised California-based THREAD Research in its sale to Water Street Healthcare Partners and JLL Partners. THREAD is an innovative provider of technology that enables virtual research approaches to modernize clinical studies and registries. THREAD’s platform and services are designed to make clinical trials and registries more accessible and less costly by replacing patient visits at investigator sites with technology-enabled interactions at more convenient locations, including patients’ homes. Water Street and JLL Partners, two of the most active private equity investors in the pharmaceutical services sector, will invest their combined industry experience and network of resources to further develop and expand THREAD’s offering on a global scale.
  • Fairmount Partners represented Haskell Office, LLC, a leading provider of innovative furniture solutions, in the completion of a debt recapitalization transaction with The PNC Financial Services Group, Inc. (“PNC”). Since its founding in 1947, Haskell has earned a global reputation for excellence by supplying superior quality furniture to its customers. Haskell has been supported by PNC since 2002 for its commercial banking needs, and as the Company has continued to scale (i.e., revenue, profitability, product portfolio, customer base), PNC has continued to expand its lending partnership with Haskell.
  • Fairmount assisted Philadelphia-based GSI Health, a SaaS provider of workflow, engagement and compliance solutions and related services, in its sale to Medecision, an integrated health management solutions provider. GSI Health has been an innovator in driving change in the industry since 2003, having pioneered workflow automation and system integration with community care providers to streamline care coordination and value-based payments for population health improvements. The GSI Health population health platform, GSIHealthCoordinator, will become part of Medecision’s Aerial™ solution, a HITRUST CSF®-certified SaaS solution that optimizes the delivery of decision support to care teams and family members.
  • Fairmount Partners advised Boston-based Cambridge Biomedical, a leading large molecule-focused bioanalytical and biomarker lab, in its sale to BioAgilytix. The transaction expands BioAgilytix’s global footprint into the heart of the world’s major biotech center, and adds further capacity by joining Cambridge Biomedical’s CLIA-certified, CAP-credited, and GLP-compliant facility with its GxP laboratories in Durham, North Carolina and Hamburg, Germany. Cambridge Biomedical has particularly extensive capabilities in kit production as well as a premier molecular suite equipped with the latest generation of PCR platforms, both of which will be immediately available to BioAgilytix’s customers.

Fairmount Partners August 2019: News

Amanda Nardi

Fairmount is the most active M&A firm based in the Mid-Atlantic, with a national and international practice.  Since 2003, the firm has completed more than 215 transactions throughout North and South America, Europe, Asia and Australia.   Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context. 

  • Fairmount Partners represented GHO Capital in providing origination support and M&A advice as part of GHO’s portfolio company Quotient Sciences sale to global investment firm Permira. Based in London, GHO Capital is a leading European specialist healthcare investment advisor. The investment provides substantial new funding to fuel the next stage of Quotient’s growth.
  • Fairmount assisted longtime client ICON (Nasdaq: ICLR) as it continues to expand its investigative site business by purchasing a majority stake in MeDiNova Research, which operates a network of 33 sites in key markets in the UK, Europe, and Africa. Coventry, England-based MeDiNova Research is one of the largest site groups in Europe and will help ICON boost its geographic footprint and its patient recruitment capabilities while complementing its existing site network in the U.S., known as PMG Research, which it bought back in 2015. This is Fairmount’s 15th transaction with ICON.
  • Fairmount assisted Novasyte, the tech-enabled outsourcing experts for medical device and diagnostic manufacturers, as exclusive financial advisor to the company in a recently completed transaction. Founded in 2008 and based in Carlsbad, California, Novasyte offers innovative sales, clinical support, and field services for the medical device and diagnostic industries. The counter party has elected to not announce the transaction, or any details of the transaction, and as a courtesy we are not including their identity. Please go to www.novasyte.com for more information. 
  • Fairmount Partners represented Regulatory & Clinical Research Institute, Inc. (RCRI), in their sale to Covance, the drug development business of LabCorp® (NYSE: LH). RCRI is the leading clinical research organization, medical device consulting firm and strategic regulatory expert based in Minneapolis. RCRI has built a reputation for designing and implementing the most complex medical device trials, applying an integrated, regulatory-centric approach at every stage of medical device development. LabCorp®, an S&P 500 company, is a leading global life sciences company that is deeply integrated in guiding patient care, providing comprehensive clinical laboratory and end-to-end drug development services. 
  • Fairmount Partners advised Goodwin Biotechnology, Inc. in securing the Company’s first outside financing with growth capital to help fund its next stage of expansion including quadrupling capacity – particularly for commercial manufacturing. Goodwin is a full GMP, FDA-registered biopharmaceuticals CDMO that offers a fully integrated Single Source Solution™ from Cell Line Development, Process Development including Bioconjugation, Scale-Up, cGMP Contract Manufacturing and Aseptic Fill/Finish of mammalian cell-culture derived life-saving monoclonal antibodies, recombinant proteins, vaccines, and Antibody Drug Conjugates (ADCs). The investment was made by Signet Healthcare Partners, a New York based growth equity firm specializing in healthcare investments. This is our second transaction with the team at Signet.
  • Fairmount Partners represented Versify Solutions in their acquisition by MCG Energy Solutions. MCG’s rapidly expanding role in the North American energy software industry is furthered by the Versify acquisition, which is MCG’s fourth major acquisition since 2017.  Versify Solutions provides a suite of web-based software-as-a-service (SaaS) applications for Energy, Utility and Industrial companies. Versify’s products alleviate the stress and pressure of operational and commercial performance and transition it into operational and commercial excellence! We help eliminate the frustration and difficulty associated with managing complex business processes and operations across a multitude of assets, regions and stakeholders.
  • Fairmount Partners represented Duck Donuts Franchising Company, the franchisor operation supporting the Company’s Duck Donuts franchised locations, in closing on a credit facility with Centric Bank.  Duck Donuts®, one of the nation’s fastest-growing donut franchises in the U.S., known for serving Warm, Delicious and Made-to-Order! ® donuts, was founded in Duck, North Carolina by Russ DiGilio in 2006. Centric Bank (www.centricbank.com) is headquartered in south central Pennsylvania and remains the leader in organic loan growth in central Pennsylvania.  A locally-owned, locally-loaned community bank, Centric provides highly competitive and pro-growth core financial services to businesses, professionals, individuals and families.

Fairmount Partners November News

Amanda Nardi

PACT Times November 2018: News

Fairmount is the most active M&A firm based in the Mid-Atlantic, with a national and international practice.  Since 2003, the firm has completed more than 200 transactions throughout North and South America, Europe, Asia and Australia.   Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context.

  • Fairmount Partners represented Artech Information Systems in their acquisition of the Talent & Technology Solutions business unit of CDI Corporation.  Artech is now one of the top-7 largest IT staffing firms in North America that provides workforce solutions, IT consulting, and SOW-project services. Headquartered in Morristown, NJ, Artech employs over 7,800 professionals, maintains over 25 locations across the U.S., Canada, India, and China and is a Tier-1/Preferred Supplier to more than 70 Fortune 500 companies and numerous federal and state government agencies. Headquartered in Philadelphia, PA, CDI Corporation is a privately held, multinational company that provides engineering, information technology, and staffing services to clients in a range of industries including energy, chemical, transportation and financial services.  This is Fairmount Partners fourth transaction with Artech.
  • Fairmount Partners represented TayganPoint Consulting Group, a well-known life sciences consulting boutique based in the greater Philadelphia area, in their acquisition by Grant Thornton LLP.  Founded in 2009, TayganPoint advises global organizations navigating complex transformation management projects, with particular expertise in healthcare and life sciences. TayganPoint has a demonstrated track record of delivering high-impact, execution-oriented results in the fields of business transformation and organizational change, business process improvement, and strategy alignment and execution.  Founded in Chicago in 1924, Grant Thornton is one of the world’s leading organizations of independent audit, tax and advisory firms. Grant Thornton, which has revenues in excess of $1.7 billion and operates 59 offices, works with a broad range of dynamic publicly and privately held companies, government agencies, financial institutions, and civic and religious organizations.

News for Fairmount Partners

Amanda Nardi

PACT Times October 2018: News

Fairmount is the most active M&A firm based in the Mid-Atlantic, with a national and international practice.  Since 2003, the firm has completed more than 200 transactions throughout North and South America, Europe, Asia and Australia.   Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context.

  • Fairmount Partners represented Wellspring Pharma Services, a Toronto-based contract development and manufacturing organization owned by Sentinel Capital Partners and Ancor Capital Partners, in its sale to ANI Pharma (NASDAQ: ANIP), an integrated specialty pharmaceutical company.  WellSpring Pharma Services is a unique cGMP compliant contract pharmaceutical manufacturer and packager of tablets, capsules, topical semisolids and non-sterile liquids products.  It also offers pharmaceutical contract manufacturing services to the companies in North America and Europe.
  • Fairmount Partners represented Dynamic Health Strategies, LLC (DHS Group) in their acquisition of Connect, a patient information network and suite of healthcare software and hardware products from Ohio-based Olive (f/k/a CrossChx).
  • Fairmount Partners assisted Altasciences Clinical Research in their acquisition of the preclinical testing business of SNBL U.S.A., subsidiary of Shin Nippon Biomedical Laboratories, the leading preclinical provider in Japan.  The transaction is expected to be completed at the end of September. This acquisition will add comprehensive preclinical safety testing services to Altasciences’ current full-service clinical and bioanalytical offerings. Altasciences Clinical Research is a mid-size CRO that encompasses Algorithme Pharma in Montreal, Quebec, Vince & Associates Clinical Research in Overland Park, Kansas, and Algorithme Pharma USA in Fargo, North Dakota, with an overall company focus on supporting early-stage drug development.
  • Fairmount Partners represented FluidEdge Consulting, a national healthcare management consulting company headquartered in Philadelphia, PA, in their acquisition by CitiusTech, a leading provider of healthcare technology solutions and services.  CitiusTech is backed by General Atlantic, a global private investment firm.  FluidEdge focuses its management consulting services within the operations and IT areas of health plan, life sciences and provider organizations.
  • Fairmount Partners represented acquisition of Argint International, a contract research organization based in Budapest, Hungary with operations across Europe, by Precision for Medicine, part of Precision Medicine Group, a specialized services company supporting next-generation approaches to drug development and commercialization.  The acquisition is part of Precision’s global growth plan; Precision’s European footprint now includes and offices in Edinburgh, Paris, Berlin, Geneva, Budapest, Bucharest, Bratislava, and Belgrade.  Hungary is the 20th country in which Fairmount’s Pharmaceutical Services group has completed a transaction.

 

Fairmount Partners August News

Amanda Nardi

PACT Times August 2018: News

Fairmount is the most active M&A firm based in the Mid-Atlantic, with a national and international practice.  Since 2003, the firm has completed more than 200 transactions throughout North and South America, Europe, Asia and Australia.   Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context.

  • Fairmount Partners represented ETHOS Health Communications, a Pennsylvania-based agency specializing in the interpretation and communication of innovative medical science, in its sale to Precision Medicine Group. The acquisition of ETHOS, which informs physicians, providers and other stakeholders through medical affairs and marketing based scientific content, allows Precision to offer its clients a significantly expanded cadre of doctoral-level science and medical communications specialists. Over its 15+ year operating history, ETHOS has established itself as an authority in understanding and translating the science of medicine into both high-level strategy and tactical execution.

Updates for Fairmount Partners

Amanda Nardi

Fairmount is the most active M&A firm based in the Mid-Atlantic, with a national and international practice.  Since 2003, the firm has completed more than 200 transactions throughout North and South America, Europe, Asia and Australia.   Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context.

  • Represented Strata Skin Sciences (Nasdaq: SSKN), a medical technology company focused in dermatology and plastic surgery, in securing $17 million of growth financing from an investor group led by Accelmed Growth Partners, an investment firm focused on value creation for medical device companies and technologies.  The transaction is under contract, pending shareholder approval at a meeting to take place during the quarter ending June 30, 2018.

Team Members News:

  • Matt Carey joined Fairmount Partners as an Analyst.  Prior to joining Fairmount, Matt worked as an analyst for J.P. Morgan in their Private Banking group. In his previous role, Matt helped advise ultra-high net worth families and individuals on investment and portfolio management as well as long-term financial planning. Matt Carey earned his B.A. in Economics, with honors, from the Johns Hopkins University. He is currently a Level III CFA candidate.
  • Peter Born joined Fairmount Partners as a Junior Analyst. Prior to joining Fairmount, Peter worked as an economic research analyst for the Hungarian Delegation in the European Parliament in Brussels, Belgium. There, he conducted a study of the TTIP and TiSA trade agreements and presented his findings to the delegation.  Peter Born earned his B.A. in Political Science with a minor in International Relations from Saint Joseph’s University.
  • Michael Rudderow joined Fairmount Partners as an Analyst.  Prior to joining Fairmount, Michael worked as an analyst with Evergreen Advisors Capital, a boutique investment bank outside of Baltimore.  There, Michael worked on sell-side and buy-side mergers & acquisitions, private placements, and corporate advisory engagements for clients across a variety of industries.  Michael earned his B.B.A. in Finance from The George Washington University.

 

SaaS Valuations and the Metrics that Matter

Amanda Nardi

The software market continues to evolve.  Historically, enterprise software was typically sold as a one-time, perpetual license plus an annual maintenance payment, usually representing 20% of the cost of the license.  The license revenue was typically large-dollar, but lumpy and non-recurring, and sales cycles were long. That said, a real benefit of the model, particularly for earlier stage companies, was that the cash generated from the sale of licenses could be used to fund the business.

Software-as-a-Service, or SaaS, models, which have become ubiquitous since Salesforce.com’s IPO in 2004, take a different approach.  SaaS is sold as a subscription, often monthly.  SaaS providers aren’t able to take advantage of being paid in advance, but the recurring nature of the revenue makes it easy to budget, and the high “flow down” of revenue to EBITDA beyond the company’s breakeven point makes it very profitable.

The inherent advantages of recurring, predicable revenues and the high “flow down” nature of the models naturally result in valuation differences between the two models, with enterprise software companies typically trading for circa 1 to 3x revenue and SaaS companies trading for 3 to 10x revenue. Further, many SaaS companies trade outside that range, both higher and lower.  So the question is, given the wide range of SaaS multiples in the market, what are the key factors distinguishing higher multiple companies from lower?

We believe that there are several core factors influencing SaaS valuation multiples. Those companies with metrics “to the right” in each of the factors tend to trade at higher valuations. The factors that we pay closest attention to are:

  • Annual Recurring Revenue (“ARR”) Growth and Scale. Growth should be analyzed relative to a company’s peer group. Smaller companies are expected to have larger growth rates than larger companies, and larger companies will generally have higher multiples than smaller companies at similar growth rates.
  • Rule of 40%. Companies with a combination of growth rate and EBITDA margins of 40% or more will generally command premium valuation multiples. Note that the rule holds true for companies at scale (greater than $8 to $10mm in revenue). For smaller companies, the threshold is generally higher.
  • Addressable Market and Moat. Having a unique offering positioning a company as a pioneer and leader in an emerging market segment that has the strong potential of growing to $500 million to $1 billion+ in five to seven years, and a substantial technological lead (two or more years) with a roadmap that maintains future leadership that reduces risk of marginalization and commoditization, strongly positions a company for a premium valuation.
  • Gross Margin; High “Flow Down” Model. Gross margins exceeding 70% indicates an attractive mix of software revenue and services. Beyond break-even, true SaaS companies may flow 50% or more of revenue to EBITDA.
  • Revenue Retention. A revenue retention rate of 100%+ (growth in revenue from existing clients exceeds revenue lost to churn) is a key indicator of the predictability of future cash flows and a strong indicator of ARR growth.
  • Customer Acquisition Cost (“CAC”) Ratio. CAC ratio is a measure of (i) the sales, marketing and other costs to acquire a customer to (ii) the incremental revenue gained during a given period, and a key indicator of the capital required to grow a company. Companies with CAC ratios under 1x have a strong likelihood of receiving a premium valuation providing the aforementioned metrics and characteristics are also solid.

In addition to these six core drivers of valuation multiples for SaaS companies, there are a myriad of company-specific factors that drive premium valuations; these factors are generally “hidden” in the aforementioned “Addressable Market and Moat” and are difficult to benchmark.

Achieving a premium valuation is significantly more difficult than a simple mathematical exercise. Many assume that SaaS companies automatically benefit from viral marketing; this is rare and it takes significant time and investment to scale (four years / $16 mm in equity capital and six years / $25 mm in equity capital to achieve $10 million and $20 million ARR run-rates, respectively). Positioning a company well and developing pressure-tested financial models that highlight a company’s “moat” and ability to grow are essential to achieving premium valuations.

Fairmount Partners Updates for February 2018

Amanda Nardi

Fairmount is the most active M&A firm based in the Mid-Atlantic, with a national and international practice.  Since 2003, the firm has completed more than 185 transactions throughout North and South America, Europe, Asia and Australia.   Fairmount specializes in advising middle-market companies on sell-side, buy-side and capital placement transactions, and provides fairness opinions and strategic advice in the transaction context.

  • Chris Kim was promoted to Associate at Fairmount Partners.  Prior to joining Fairmount, Chris worked as an analyst at a Los Angeles based technology-focused boutique investment bank focusing on M&A advisory and growth financings for middle-market and emerging-growth companies.  Chris Kim earned his B.S. in Business Administration, with a concentration in Finance from Boston University.

 

  • Jason Levy was promoted to Associate at Fairmount Partners. Prior to joining Fairmount, Jason worked at Ernst & Young in their Transaction Advisory Services practice. In this capacity, he performed valuation of business enterprises, intangible assets, and equity and debt interests in connection with acquisitions, bankruptcies, litigation, strategic alliances, and divestitures.  Jason Levy earned his B.S. in Finance, with distinction, from the Pennsylvania State University.

 

  • Represented Grand River Aseptic Manufacturing (GRAM), a leading provider of high-quality, sterile parenteral solutions, in the majority investment by Arlington Capital Partners, a private equity firm in the Washington, D.C., area with $1.5 billion of committed capital focused on middle market investment opportunities.  The new partnership will provide funding for GRAM to expand and add capacity to meet the rising demand for parenteral development and manufacturing services.

 

  • Represented pair Networks, Inc., a top-rated, pioneering provider of hosting solutions, in its sale to Liberated Syndication, Inc., the world’s leading podcast hosting network. Founded in 1995 and based in Pittsburgh, Pennsylvania, Pair is one of the world’s longest-established hosting companies. Pair offers a wide array of solutions including managed hosting (dedicated servers), virtual private servers, and WordPress hosting and provides world-class 24×7 on-site customer support.  The combined businesses generated approximately $23 million in revenue and $7 million in EBITDA during 2017.