The Halifax Group had three strong exits in 2016, including its sale of Envision Pharma Group, which was a grand slam success. The firm purchased the company for $81.8 million in 2013 and sold it in 2016 for $331.4 million. At the time of Halifax’s investment, Envision’s service lines had an estimated addressable market size of around $1 billion. Driven by the demand for evidence-based marketing information, Envision began to expand its services and software capabilities. Envision’s addressable market in 2015 became more than $20 billion.
The purchase came about when Halifax, along with management, completed a carve-out of Envision from Express Scripts Holding Co. (NASDAQ: ESRX). Envision was being sold as a “scientific publications planning” company with little value being assessed to its integrated software capabilities or the fact that it possessed clinical trials data that could be used to position new drugs in an evolving evidence-based marketing environment.
“Drug companies were no longer able to promote drugs without scientific evidence of their capabilities. Envision’s capabilities included collecting and reporting clinical trials data coupled with a software platform to store, deliver and analyze that data. That put it in a prime service provider position as evidence-based marketing became crucial to selling drugs,” said David Dupree, founder and managing partner of Halifax.
Halifax was able to purchase Envision for less than 6x trailing Ebitda. During Halifax’s ownership, the company completed two acquisitions, added four locations, and developed four new product offerings on a new software platform. As a result, Envision grew from approximately $51 million in revenue and $14 million of Ebitda to more than $90 million of revenue and $29 million of Ebitda. In July 2016, Halifax exited the business in a sale to management, Ardian and GHO Capital.
“The company was capital starved inside of Express Scripts, and they needed to invest money for growth. We recognized that and made the investments needed,” said Dupree. “We were able to complete two acquisitions, build a new software platform and thereby grow the company substantially.”
From the beginning of the deal, management insisted on having substantial employee ownership in the company, and Halifax agreed. “Management invested and also rolled a substantial portion of their ownership. Upon the sale, many employees who were just making normal salaries became millionaires. It was a special moment for management,” said Dupree.
In addition to the Envision deal, Halifax sold Nutrition Physiology Corp. (NPC) to The Chr. Hansen Group, a global bioscience company. NCP is a developer and marketer of probiotic drugs for livestock. Halifax made 3.5 times its money on the sale. The firm also sold Golden State Overnight, (GSO), a regional provider of overnight delivery services in California, Nevada, Arizona and New Mexico to General Logistics Systems, a European parcel services business owned by Royal Mail plc. The firm made 2.6 times its money back on the sale.
Said Dupree , “Selling is never easy. Both management and sponsor have to be committed, and there is a right time. You know it when you see it. We never push for a sale. It happens when the time is right.”