Hg's MEDIFOX sale launch draws large-cap sponsor interest

Information memoranda (IMs) marketing the company off around EUR 40m EBITDA were distributed earlier this month, four of the sources said. The sellside is striving to fetch a EUR 1bn price tag for the asset, or the equivalent of 25x EBITDA, two of the sources said.

Books were sent out to a wide array of sponsors, including several big European tech-focussed funds, one of the sources said. BC Partners, Warburg Pincus and Permira are among the large-cap sponsors who have been looking at MEDIFOX, another source added.

Initial offers are expected to be collected over the next two weeks, according to one of the sources.

Houlihan Lokey is advising on the sale, as previously reported by Unquote sister publication Mergermarket.

Given that the sellside carried out extensive pre-marketing ahead of the sale launch, the auction is expected to proceed quickly, two of the sources said, with one adding that some sponsors have already been doing "outside-in work" for months to prepare for a bid.

While MEDIFOX is a strong performer financially and has grown well under Hg's stewardship, the next owner will likely need to grapple with internationalizing the company and taking it outside Germany's borders, the sources and a sector banker said.

And while Hg has pursued a "national champions" strategy with MEDIFOX in its home market, the next owner might also need to consider taking up cloud migration for further domestic growth, another source said.

Hg acquired a majority stake in MediFox in 2018 from ECM Equity Capital Management for an undisclosed sum. The company at the time posted EUR 13.5m EBITDA and had 265 employees, according to Mergermarket data.

Add-on buying spree
Under Hg's ownership, MediFox merged with German healthcare management software provider DAN Produkte in January 2020 and rebranded as MEDIFOX DAN.

Earlier this year, MEDIFOX acquired adiutaByte, a German planning and optimization software company, and Hamburg-based e-learning company smartAware.

Other recent add-on deals completed include its acquisitions of German software company Multiflex-Solutions; German e-health company Töchter & Söhne; and German software developer for inpatient care facilities Loepertz Software, all in 2021 for undisclosed sums.

Still, this spate of add-on acquisitions might cause some bidders to question the asset's high price tag, one of the sources said.

"I don't know if the market is ready to pay this for a business that just recently acquired four new businesses and is still working on integrations," the same sources added.

Founded in 1994 and headquartered in Hildesheim, MEDIFOX is a provider of software solutions to support care providers with services including resource and route planning, care and support documentation, management information systems, as well as billing, factoring and administration services, according to Hg's website. It has more than 8,000 customers and almost 100,000 users.

In March, sources told Mergermarket that MEDIFOX generates EUR 35m-EUR 50m EBITDA, with its cash EBITDA closer to EUR 40m.

In 2020, MEDIFOX reported EUR 15m EBITDA and a sales increase in the "low" double-digit percentage range, according to its most recently available public filings. The company has more than 700 employees, according to its website.

Hg, BC Partners, Permira, Warburg Pincus declined to comment. MEDIFOX and Houlihan Lokey did not respond to requests for comment.

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• Topics
• Exits
• DACH
• Healthcare
• BC Partners
• Permira
• HgCapital
• Warburg Pincus
• Germany
• Houlihan Lokey
• Mergermarket