 
In certain fragmented markets, it is often easier and more efficient to grow
a business primarily by acquisition than to rely solely on internal
expansion. This strategy typically involves the addition of complementary
businesses to a larger initial platform. By establishing critical mass
quickly, market momentum often accelerates, economies of scale drive margin
improvement and the business gains competitive advantage. Examples
of
transactions we have completed in the leveraged buildup category include
Brooks Equipment Company, Inc., Esoterix, Inc., and Tandem
Health Care, Inc.
Brooks Equipment Company, Inc., is a premier wholesale distributor of
industrial fire protection equipment and supplies used in the first-response
segment of the fire protection industry. Founded more than 50 years ago,
Brooks has a long history of providing the outsourced inventory function to
thousands of small service companies. Through a series of add-on
acquisitions and internally funded growth, Brooks has transformed itself
into a generalized logistics management business with market positions in
public safety, fire protection, law enforcement supply and logistics.
Esoterix, Inc., is a clinical laboratory testing company focused on rare and
complex diseases. After Behrman Capital developed a detailed business
strategy for consolidating the fragmented esoteric clinical laboratory
market, we recruited a top-tier management team to execute the plan. Within
a short period of time, Esoterix acquired six companies that were considered
to be centers of excellence by the scientific community in different disease
corridors. Since that time, Esoterix has been transformed into a unified
business with three operating units: Laboratory Services, Oncology and
Clinical Trials. Bound by a common laboratory information system and billing
system, and marketed as a full-service reference laboratory, Esoterix is a
completely integrated entity.
Tandem Health Care, Inc., is a buildup of regionally concentrated skilled
nursing facilities. Funded by Behrman Capital to capitalize on the changes
in Medicare reimbursement, the company has grown organically and by
acquisition, achieving revenues of more than $325 million. Concentrating on
improving facility management and selectively pursuing de novo development
projects, Tandem has also expanded the ancillary services offered within its
network.
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Esoterix, Inc.,
a specialized reference laboratory, is benefiting from scientific
advances in molecular biology and the human genome to develop innovative
diagnostic tests for its patients and physicians.
In addition to transactions involving more established companies, we also
invest in promising companies that have the potential for rapid growth.
These companies may require additional capital for a variety of reasons,
including building up their infrastructure, developing next-generation
products or penetrating new markets. They generally are run by a proven,
entrepreneurial management team, have revenues in the $20 million to $250
million range and are profitable. Depending on the specific requirements of
a company, we support management in a variety of ways, including helping to
build its team, refine its strategies, implement management information
systems and assess the viability of mergers and acquisitions.
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