Hermitage Equity Partners and Greyrock carry out acquisition of Bentec Medical Inc.

Hermitage Equity Partners and Greyrock carry out acquisition of Bentec MedicalGreyrock Capital Group provides, most likely, mezzanine financing in this takeover transaction. The PE firm, Hermitage Equity Partners, acquires an established and leading company, Bentec Medical, in silicone medical device niche.

According to Hermitage investment philosophy, they look for high-growth potential, $10-250 million revenue and, ideally, non-cyclical businesses. Bentec Medical fulfills these requirements. What is interesting in this transaction is that it appears to be an exit of the company founder and CEO, Briant Benson. He continues to work with the company as a consultant. This is an example of mezzanine financing potentially enabling exit of the original founder or founding team, which is of importance to many middle-market companies.

Target company overview

Bentec Medical is a market leader in the design and manufacture of silicone-based medical devices, related component-level parts and OEM contract and engineering services.

Founded in 1994 by Briant Benson, Bentec Medical is focused on developing and manufacturing medical devices and OEM components based on medical/implant grade silicone and PVA materials to the exacting standards used in the Medical Device Industry. Bentec supports some of the largest names in the business, providing professional services to assist in the areas of turn-key design, engineering, and prototyping from small to high volume production.

The company’s expansive medical device product line and OEM products are used for many applications including Oncology, Cardiology, Urology, Pediatrics, General Surgery, ENT, and Interventional Radiology.

With this sale, Mr. Benson will no longer be an employee or board member of the Company, but will remain as a technical consultant. Replacing Benson as CEO is Scott Christensen, a 35-year medical device veteran who has served as Bentec’s President and COO since March 2015.

Use of proceeds

The new CEO and the new investors are clearly looking for growth opportunities. It is not clear, however, if they are considering organic growth alone or mix of organic and acquisitions. Based on Scott Christensen’s comment, the growth targets are likely to be ambitious:

Their [the investors’] capital strength and industry knowledge will allow us to grow much faster than we otherwise could on our own. We are now able to take Bentec Medical to the next level with increased capabilities, expanded capacity and enhanced customer service and support.
Bentec’s CEO Scott Christensen

The growth outlook is also supported by comments from the PE firm:

We look forward to working with Scott Christensen and his talented management team to build upon Bentec’s already strong foundation and create a much larger and more valuable enterprise.
Jay Binkley, Hermitage Equity Partners’ President

Mezzanine funding provider

Mezzanine financing for this transaction was provided by Greyrock Capital Group. Greyrock specializes in offering mezzanine debt and equity for buyouts, recapitalizations and the internal growth needs of middle-market companies. They require strong equity sponsor, such as PE firm, or a management team that has demonstrated track record and capability to grow further. Full Greyrock Capital Group profile is also available on Get Mezzanine Financing.

It is interesting to see that the press release mentions new team members joining Hermitage team to support the transaction and further growth:

In order to support us in this effort, we are excited to announce that three former senior officers from Hospital Corporation of America and Medtronic have joined our investment group, and we look forward to the industry insights and relationships they bring to our partnership.
Jay Binkley, Hermitage Equity Partners’ President

Such reinforcement of PE investment team is definitely welcome by mezzanine debt provider.

References and useful links