OceanSound Partners has acquired PAR Excellence Systems from Northlane Capital Partners.
PAR Excellence delivers inventory management systems—encompassing hardware products and cloud-based software—tailored for government, non-profit, and private healthcare organizations. These systems automate inventory replenishment and offer real-time, system-wide inventory visibility.
For instance, the company’s PAR Bins product uses weight-based precision scales to track inventory levels continuously. Data from storage locations is transmitted to PAR’s software, which auto-generates orders and provides guidance for internal inventory refills. By utilizing its proprietary analytics platform, healthcare organizations can optimize inventory management, significantly reducing supply and labor costs by automating previously manual tasks.
Cincinnati-headquartered PAR, led by CEO Thad MacKrell, was founded in 1992 and has more than 160 employees today.
“We are thrilled to partner with OceanSound, whose expertise in government and regulated markets will be valuable to us as we continue our growth trajectory with leading healthcare systems in the government, non-profit, and private markets,” said Mr. MacKrell. “The hospital inventory management market is ripe for significant digital transformation, and our team continues to serve our customers with the best products and services in the market. OceanSound’s partnership will enable us to accelerate investments in innovative products to serve the hospital and health system market better.”
“Labor and supply costs in U.S.-based healthcare systems collectively totaled approximately $1 trillion in 2023 and are steadily increasing above the annual inflation rate. This rapid growth is unsustainable for the U.S. healthcare system, and PAR’s solutions alleviate the pressures of labor and supply cost increases, allowing customers to redirect their efforts and investments to the core purpose of the healthcare system – improving the quality of patient care and medical outcomes,” said Joe Benavides, the managing partner of OceanSound. “Completing this transaction marks the beginning of an exciting new chapter for PAR. We look forward to helping the company further develop its mission-critical, supply chain integrity and cost management solutions while expanding its presence across the U.S. healthcare system.”
Northlane acquired PAR in February 2017 and will continue as a minority investor in the company in partnership with OceanSound. “Northlane has been a valued partner, and we are pleased they will continue as investors in this next phase,” added Mr. MacKrell. “We are grateful to Northlane for its strategic and operational support.”
Northlane invests from $25 million to $150 million in equity in companies with EBITDA of $5 million to $30 million and valuations from $50 million to $300 million. Sectors of interest include healthcare and business services. The Bethesda, Maryland-based firm was formed through the January 2017 spinout of American Capital Equity III LP from American Capital as a result of the acquisition of the company by Ares Capital. In April 2021, Northlane held an above-target close of Northlane Capital Partners II LP with total capital commitments of $408 million.
“Since our investment in 2017, we have collaborated closely with the PAR management team to broaden the company’s product offerings and expand PAR’s commercial and technical capabilities,” said Justin DuFour, a partner at Northlane. “PAR has clearly established itself as an innovative supply chain management solutions provider, and we are confident in its ongoing success.”
OceanSound makes control investments of $75 million to $300 million in North America-based technology and technology-enabled services companies serving the government and enterprise industries. Typical target companies will have enterprise values of $150 million to $750 million. The firm was founded in 2019 and is led by Managing Partner and Co-Founder Joe Benavides alongside fellow partners and co-founders Ted Coons and Jeff Kelly.
“We are excited to partner with Thad and the PAR Excellence team and to leverage our resources, especially our government and regulated healthcare expertise, to accelerate growth and help to transform the company further,” said David Stein, a principal at OceanSound. “PAR’s track record of driving innovation in the healthcare supply chain ecosystem is impressive and emblematic of the types of companies we seek to invest in. The company is well-positioned to sustain its rapid expansion and meet the increasing demand for digital transformation in healthcare supply chain management. We expect to help accelerate feature enhancements to PAR’s integrated product suite, accelerating organic growth across the government, non-profit, and private healthcare system markets. These developments and strategic acquisitions will enable PAR to deliver a more comprehensive, end-to-end supply chain integrity and cost management solutions.”
In February 2022, OceanSound closed its debut fund, OceanSound Partners Fund LP, with an above-target $780 million of committed capital. The firm is raising its second fund, OceanSound Partners Fund II LP, but has not yet held a final close.
Guggenheim Securities was the financial advisor to PAR, and Lincoln International was the financial advisor to OceanSound.
© 2024 Private Equity Professional | September 10, 2024
