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'Braced for growth': How Austin startup Pet Honesty has become a national brand

'Braced for growth': How Austin startup Pet Honesty has become a national brand
Austin American Statesman
By Lori Hawkins
Published September 2022

Four years ago, entrepreneurs Ben and Camille Arneberg created their company, Pet Honesty, as an e-commerce outlet to sell natural pet supplements.

The Austin-based startup grew by selling its pet vitamins on its website as well as on sites including Amazon.com and Chewy.com. During the coronavirus pandemic, a sales boost came from people adopting pets and spending more time at home with them. Now the company is taking a big leap, with a new CEO, a new downtown Austin headquarters and a major launch into its first brick-and-mortar retail venture by entering 1,500 Petco locations nationwide.

"Pet Honesty has built a loyal and growing online following of health-conscious pet parents who seek products made with natural ingredients," said CEO Richard Greenberg. "There has been interest from retailers for the last couple years, and the company wanted to be very patient. Petco was the perfect fit."

'Large growth opportunity'

Greenberg said company research has found that 29% of pets are given supplements. "There remains a large growth opportunity," he said. "We have a pretty diverse customer base," he said. "It's that proactive pet parent. Often times they're giving their children a multivitamin, they might be taking a supplement themselves. They're looking to treat their four-legged children the same as they treat their two-legged children."

The company has high-profile displays and interactive surveys with QR codes at Petco stores to help pet owners and employees determine the most suitable supplements, Greenberg said.

Pet Honesty's supplements include its Multivitamin 10-in-1, which the company says supports overall health in adult dogs, as well as a range of supplements that target joint, immune, digestive and skin health for both cats and dogs. The company does not disclose where its supplements are produced, but Greenberg said they are made in the United States.

Retail prices for a jar of 90 supplements sold online and in stores begin at $26.99, with special formulations and maximum strengths ranging between $28.99 to $40.99. One jar would typically supply a small to medium dog for three months, according to the company.

Greenberg joined the company this year following a majority investment in Pet Honesty by New York-based private equity firm Vestar Capital Partners. Financial terms of the deal were not disclosed.

Vestar Capital Partners. has a background in investing in the pet food industry and consumer brands. The firm previously owned Big Heart Pet Brands, whose products include Meow Mix, Milk-Bone and Natural Balance. Vestar's current investments include Dr. Praeger's Sensible Foods, a manufacturer of plant-based foods; Simple Mills, a organic cracker, cookie and baking mix brand, and Presence Marketing, a national sales broker that represents natural and organic food, beverage and personal care brands.

Pet Honesty founder Ben Arneberg will continue to serve as a director on the company's board, and he and his family will retain their "significant investment" in the company, Vestar said. "We have been fortunate to find the right partner in Vestar, which remains committed to our business strategy and will help provide the financial backing, indust1y relationships and catego1y expertise needed to build on our momentum," Areberg said.

Greenberg has spent the past two decades as a consumer product goods executive, most recently servicing as chief commercial officer of Sovos, which had an initial public offering in fall of 2021. Sovos' brands include Rao's Homemade, Noosa Yoghurt, Birch Benders and Michael Angelo's.

'The company is growing'

Greenberg said Pet Honesty will be looking for additional brick-and-mortar retail opportunities.

As the 40-person company is ramping up for this new wave of growth, it has moved into a new headquarters in downtown Austin at 211 E. Seventh St. "The size of our staff has doubled in the last 12 months," Greenberg said." The company is growing and is really braced for growth as we launch into retail." The downtown move is intended to boost company culture. "We love the energy and vibe of downtown that it provides," Greenberg said. "We are a high energy, passionate company and building our culture is a big part of building momentum for the company."

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Simple Mills Reports Significant Post-Pandemic Growth, Doubling Retail Sales Since 2019

CHICAGO--(BUSINESS WIRE)--Simple Mills, the company on a mission to advance the holistic health of the planet and its people through delicious, better-for-you foods, today announced it experienced its most momentous growth in company history from 2019 to 2022. Simple Mills more than doubled retail sales during this timeframe. The brand was originally founded to help make clean, nutrient-dense foods easy and accessible, but evolved its mission in 2021 to include planetary health as an equally critical component, making a promise that all future innovation will advance regenerative agriculture.

“I started Simple Mills in 2012 with a brazen vision of helping people feel better through purposeful, nutrient-dense food that easily fit into their lives and didn’t ask them to sacrifice flavor for health,” said Simple Mills founder and CEO, Katlin Smith. “But as the business grew, I realized human health can’t truly exist without considering the health of our planet. I became interested in regenerative agriculture and how we can use food as a force for both human and planetary health. We took a significant leap in evolving our mission and making a commitment that 100% of product innovation moving forward will help advance regenerative farming principles – but what’s most exciting is how consumers and retailers are responding. We’re experiencing growth and recognition unlike anything we’ve seen since our founding and are excited to continue amplifying our people and planet-forward mission in 2023 and beyond.”

As consumers increasingly recognize the impact their food choices have on their own health as well as that of the planet, Simple Mills has become a staple in millions of American households. To pioneer the way the world eats through revolutionary food design, Simple Mills created three product innovation pathways: 1) design for diverse ingredients, 2) direct trade with farmers, and 3) invest in regional adoption of regenerative agriculture principles for key ingredients. One hundred percent of its product innovation now advances regenerative agriculture through at least one of these pathways. The brand’s evolved mission and commitment to personal and planetary health is evident in new product launches, including new Nut Butter Stuffed Sandwich Cookies, smartly sweetened with organic coconut sugar from perennial trees that thrive within agroforestry systems and Organic All Purpose Baking Mix, which features a diverse, nutrient-dense mix of chestnut, almond, buckwheat, and flax flours.

The company is also strengthening its work with farmers and suppliers to provide greater transparency to on-farm practices through a new Regenerative Agriculture Engagement Tool. This proprietary interactive platform gathers farm-level data from suppliers about specific practices used by farmers throughout the supply chain. It also helps visualize trends across regions and crops, while serving as a farmer-forward resource by prompting reflection on ways growers are already implementing regenerative principles on their land and highlighting opportunities to expand their approach in the future.

“Our commitment to a product design framework that connects our regenerative agriculture initiatives to our innovation pipeline is at the heart of our vision,” said Christina Skonberg, Director of Sustainability & Mission. “The three innovation pathways guide our product development process, and our programming allows us to gain visibility to the farm-level practices and associated impacts to our value chains, which is critically important for creating products that are better for consumers and the planet. We’re especially excited about our improved Regenerative Agriculture Engagement Tool, as it’s an incredible way to gain insight and visibility into ingredients throughout our supply chain, identify partnership opportunities to scale regenerative principles, and serve as a resource to farmers and suppliers who are interested in deepening their commitment to the health of the land.”

To support its robust innovation pipeline, Simple Mills recently opened a new innovation hub, called Sunworks, in Mill Valley, Calif. The space sits in a geographical epicenter for innovation and disruptive design, and serves as a new destination for creativity. It houses the Innovation, R&D, and Sustainability teams alongside Smith. Many of the brand’s farm partners and agricultural thought partners are also located in California, giving the team opportunities to learn from leaders in the agricultural movement on a regular basis while also providing a place to host farmers, media, and industry events. In addition to the Sunworks office, Simple Mills has seen powerful growth across its workforce, with 100% growth between 2020 and 2022, reaching nearly 100 employees. With 62% of employees having been hired since the start of COVID-19, the brand has fostered an inclusive hybrid work environment with employees spanning 17 additional states across the country.

Simple Mills crackers, cookies, bars and baking mixes are sold in more than 28,000 natural and conventional stores across the country. This includes national distribution with top U.S. retailers, including Whole Foods, Sprouts, Target, Walmart, and Costco. In the last five years alone, Simple Mills has entered more than 20,000 new stores, increasing its brick-and-mortar availability by more than 300%. Aside from significant retailer growth, the brand also has a strong e-commerce presence both on Amazon and its own website.

To learn more about Simple Mills, its commitment to advancing regenerative agriculture through innovations, and to find a retailer near you, please visit www.simplemills.com.

About Simple Mills

Founded in 2012, Simple Mills is a leading provider of better-for-you crackers, cookies, snack bars and baking mixes made with clean, nutrient-dense ingredients and nothing artificial, ever. Celebrating its tenth anniversary this year, the company has disrupted center-aisle grocery categories to become the #1 baking mix brand, #1 cracker brand, #1 cookie brand in the natural channelwith distribution in over 28,000 stores nationwide. Its mission is to advance the holistic health of the planet and its people by positively impacting the way food is made. For more information, visit www.simplemills.com.

1. SPINS Data, $ Sales, Latest 52 Weeks Ending 9/4/22


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Nikole Norin
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Headshot of Nikhil Bhat.

Despite Tech Sector Tumble, Big Data Beckons

Despite Tech Sector Tumble, Big Data Beckons
Mergers & Acquisitions Magazine
By Rich Blake
Published July 2022

Following the technology market rout during the spring, the growth-oriented private markets licked their wounds and picked their spots.

One of the leading subsectors deemed poised for expansion, regardless of on economic slowdown? Data analytics.

"Companies across the board are compelled to find a competitive edge to drive growth and profitability, especially in challenging times," says Nikhil Bhat, a managing director at Vester Capital and who helps lead the private equity firm's business and technology services investments.

"Harnessing big data is a source of competitive advantage." he says.

From asset management to supply chain logistics, there is a major push by companies to deploy cutting edge analytics. In little more than the past decade, the data science space has transcended the pages of "Moneyball" and moved into a realm marked by big strategic investments.

Research firm Fortune Business Insights predicts the "big data analytics" market will grow globally by 13 percent per year for the next six years, to become a $500 billion industry by 2028.

One of Vestar's more noteworthy data-driven deals involved carving Institutional Shareholder Services (ISS) Inc. out of MSCI Inc. That was back in 2014. Vester at the time backed management to grow ISS further out of its proxy-advisory-focused roots into a comprehensive corporate governance and ESG data analytics provider. Fast-forward to 2017 - ISS underwent a management buyout led by Genstar Capital - and capabilities expended further still. And then, last year, ISS hit a homerun: Deutsche Borse, pivoting from trading-related fees to delivery of real-time investor data, acquired it from Genstar for $2.2 billion. That's nearly seven times the price ISS reportedly fetched eight years prior.

“People like to talk about machine learning and A.I. and these are useful Tools,” Bhat explained. “But what matters most in this space is using a deep understanding of the customer to provide them with the insights they need to make better business decisions.”

Becoming a data-driven company is a heavy lift and natural impediments could thwart best-case scenarios for growth in demand for such services if only due to unpreparedness. Some 80 percent of major corporations surveyed by IBM say having a more robust data-architecture is currently a top priority, and also a challenge.

“Data analytics has invigorated legacy business models and upended traditional corporate cultures,” says Shaun Dookhoo, associate director at Shoreline, a global advisory firm which specializes in helping asset owners use data. Organizations that have harnessed data analytics have benefited immensely at the expense of their competitors, while laggards often struggle to establish the necessary culture required for leveraging data, according to Dookhoo.

A recent deal that underscores the breadth of the scope of the data science opportunity: Omers Growth Equity, a part of Toronto-based Omers pension system, in May of 2022 helped seed Imply Data Inc., valued at $1.1 billion. Imply develops real-time analytics databases. Its founders are the same developers who created Apache Druid, go-to software for open-source projects that transform vast datasets into actionable intelligence.

The deal was led by Thoma Bravo which not surprisingly has its fingerprints all over the big data space. In June 2016, the technology-focused private equity powerhouse firm took Qlik private in a $3 billion deal. Qlik does data visualization, the end result all this software wizardry. It's the output, as opposed to the input, all of it part of a sprawling continuum of data harnessing activities.

Silicon Valley-based Talend is an example of a leading player focused on pulling in and making sense of humongous, disparate flows of data coming like spray from a fire hose connected with myriad sources. Thoma Bravo took Talend private in a deal that closed last September. Final price tag: $2.4 billion.

“We're focused, post tech-crash, on sub-sectors of tech that we deem to be resilient and transformative,” says Chip Virnig, partner at Thomo Bravo. Cybersecurity is arguably one such area, he points out. And data analytics is another.

“Data analytics is a vast space with a lot of niches and complex components to it,” he says.

In addition to the input and output segments along the continuum there is a middle-phase segment. It's led by companies such as publicly traded Snowflake (storage) and Alteryx (blending and integrating data streams).

Companies are viewed by some in the industry as having no alternative but to push further into data science and related tools. The beleaguered, at times broken down, global supply chain is vividly illustrating the importance of having real time Insights. Companies need to know which suppliers are most reliable, which redundancy/contingency options are viable, where delays are happening, how raw materials can be obtained more cost effectively, and so on.

“The exciting thing about this market is with Al and ML (machine learning) we can now take live data feeds and deliver real time actions via automation,” Virnig says. “It adds a whole new element in terms of return on investment.”

One of the more impressive success stories to come out of the big data sector ties to the early months of the pandemic when Vyaire, a maker of ventilators, used Talend's data platform to ramp up production from six machines to 600. Rigorous analysis using every data point on the assembly line was distilled into a re-tool blueprint that identified a series of ultimately fixable chokepoints within the quality control process.

Applying big data strategy to analytics asset management can produce an enormous informational edge to this subsector. It'll continue to grow in line with the baseline amount or assets - tens of trillions of dollars, worldwide - to be managed, said Joe Donohue, vice chairman of DC Advisory, an M&A/private capital advisor serving growth companies in North America.

“Companies like Bloomberg, FactSet Reuters and S&P Global are in a race to capture market share,” Donohue said, pointing to what could be a forthcoming cycle of new strategic bolt-on acquisitions as priorities shift to areas of growth, such as, say, ESG.

In the case of Deutsche Borse, their push into ESG factor data was the driving force behind its purchase of ISS.

Vester has done several deals that illustrate the data analytics groundswell.

Back in 2018, Vestar led an investment in Information Resources Inc. (IRI), which at the time, was owned by New Mountain Capital who retained a significant stake in the company. Not to be confused with ISS, IRI is a leading global provider of big data and predictive analytics to the consumer packaged goods sector, integrating otherwise disconnected consumer data streams (purchase habits, media consumption, as well as social, causal and customer loyalty data) to help corporate customers grow their businesses. This past April, IRI announced plans to merge with NPD Group, a global consumer data provider to the general merchandise and food service sectors, bringing together complementary, leading data assets on an advanced technology platform. Hellman & Friedman, which owns NPD. will acquire a majority stake, while Vester and New Mountain will retain significant minority stakes in the combined company.

Previously, Vestar’s Healthcare team, in 2017, led an investment into a founder-owned company called Quest Analytics, a leader in health plan provider network management analytics software. This deal exemplified the trend towards investing in vertically focused software and data analytics companies. Quest has since made, with Vestar's backing, two strategic acquisitions to expand its data sources and analytics capabilities.

“Health plan networks are characterized by massive amounts of complex, dynamic data on healthcare providers” Bhat said.

By investing heavily behind its technology and analytics capabilities, Quest created a platform that enables health plans to build high-quality networks.

“That drives positive health outcomes for members,” he said. “Something everyone in the industry wants to achieve.”





Headshot of Nikhil Bhat.

Vestar’s Nikhil Bhat: Information services are ‘in the middle innings of a shift’

Vestar’s Nikhil Bhat: Information services are ‘in the middle innings of a shift’
PE Hub
By Mary Kathleen Flynn
Published May 25, 2022

"Vestar seeks companies that 'use technology to aggregate, integrate, and analyze mission-critical data sources to drive high-impact insights for their customers."

Vestar Capital was early to recognize the value of companies that leverage data in sectors including healthcare. The New York private equity firm is still investing heavily in data-driven companies. In April, Hellman & Friedman agreed to acquire a majority stake in IRI and merge it with H&F portfolio company NPD. Vestar and New Mountain Capital will retain significant investments in the combined company. The deal is expected to close in the second half of the year. For insights on how the use of data has changed over the years and how PE is investing in data targets today, PE Hub reached out to Nikhil Bhat, Vestar partner and co-head, business and technology services.

How has the role of data evolved in businesses, and what are private equity firms investing in today?

Data has always been a key input in helping companies make critical business decisions. Over the last 10-15 years, the quantity of available data – about customers, products, markets, supply chains and internal operations – has grown exponentially, while the difficulty of acquiring this data and the cost of computing power to analyze it have shrunk dramatically. Companies who can make sense of this data are able to make better business decisions to drive growth and profitability; but given the sheer volume and complexity of the information, this is not easy.

We are looking to invest in vertical information services companies that use technology to aggregate, integrate and analyze mission-critical data sources to drive high-impact insights for their customers.

What is driving dealmaking in the sector?

We are in the middle innings of a shift in what drives value and differentiation for information services businesses. Previously, it might have been enough to provide a proprietary data source, and deliver a raw data product to customers in a database or spreadsheet. Today, value is driven by providing customers with self-service tools to quickly extract actionable insights from the data, and seamlessly integrating these tools into client workflows to support augmented decision-making. The most advanced companies, agnostic of size or industry, are using artificial intelligence and machine learning to further enhance speed and quality of analytics.

Every company is at a different stage of this transition. We get most excited by opportunities to help management teams invest behind technology and innovation to accelerate their evolution along this curve. Industry consolidation is another major opportunity; acquiring adjacent data sources or analytics technologies and combining them into a single solution that integrates into multiple client workflows can drive significant value for the customer, which in turn drives growth and value creation in the investment itself.

What are some of the data analytics companies Vestar has invested in recently and why?

Previous Vestar investments in the data analytics space include Press Ganey, Institutional Shareholder Services, MediMedia and StayWell. Current investments in the space include IRI, a provider of big data and predictive analytics to the CPG industry; Quest Analytics, a healthcare provider network management software and data company; LERETA, a data- and tech-enabled services provider to the mortgage industry; and Mercury Healthcare, which provides predictive analytics around healthcare provider and consumer engagement.

In each of these investments, we’ve been excited to partner with best-in-class management teams to invest behind innovation and technology, bolstered by strategic M&A, to fuel growth by creating value for the customer. For example, when we carved ISS out of MSCI, management had a vision to stand up a best-in-class technology architecture and use this to accelerate innovation. This technology investment, in addition to five strategic acquisitions, helped management transform the growth profile of the business in a relatively short timeframe.

Quest Analytics is another great example, where we’ve invested heavily in talent, product, and technology, and made two important acquisitions. As a result of these efforts, the company has nearly quadrupled in size since we made our original investment in 2017.

Tell us about exits. What are the opportunities?

There is an active buyer universe for best-in-class data analytics companies. We spoke earlier about industry consolidation – there are a number of larger, vertically-focused information services companies that have active M&A efforts and can be great homes for our investments. Larger-cap private equity can also be great partners for our investments and management teams, since many of the value drivers we’ve been discussing today are still highly relevant at larger scale. The public markets have historically been an attractive option as well, ascribing significant value to data analytics companies’ recurring revenue, robust growth profiles and attractive economic models.

Let’s talk about IRI. Walk us through how you grew the firm, how the merger with Hellman & Friedman’s NPD came about, and why you held onto a minority stake in the combined company?

We’re very proud of what IRI’s management team has accomplished over the course of our partnership. When we made our investment, we were impressed with IRI’s Liquid Data technology platform, which provides cutting-edge predictive analytics, visualization and decision support tools that help customers make sense of the vast and growing ocean of first- and third-party consumer data. Since then, the company has invested heavily behind innovation – with Liquid Data as its backbone – to create and grow new products that enable mission-critical decision-making across almost every aspect of our customers’ businesses. In addition, IRI has made three strategic acquisitions over the last three years to accelerate its product development roadmap in high-growth areas. These investments, paired with great execution and continued share gain in the core, have led to significant growth and value creation at IRI.

We’re incredibly excited about the merger of IRI and NPD, which will create the premier global information services provider to the consumer goods industry. Bringing together the companies’ complementary data sources – IRI’s CPG data and NPD’s general merchandise and foodservice data – on a single, leading-edge technology platform will allow the combined company to create new, superior products that help brands and retailers collaborate, better serve their customers, and navigate an increasingly complex and dynamic consumer behavior landscape.

It’s probably clear why we wanted to maintain a significant minority stake in the company. The potential for innovation, and resulting enhancement to the customer value proposition, should be a catalyst for growth, and we have tremendous confidence that the combined company’s management team will bring IRI and NPD together in a way that creates meaningful value for clients, employees and investors alike.

How are macroeconomic forces, including inflation, rising interest rates, supply chain problems and labor shortages, affecting deals in the sector?

On balance, these forces are a net positive for data analytics businesses. Factors like input cost inflation, wage increases, shifting customer behavior, and supply chain frictions are complex and opaque; good information services companies bring transparency to these issues, and help customers both mitigate risks and identify opportunities stemming from these market dislocations. As a result, our data analytics investments are becoming more important partners to their customers than ever before.

What’s the future for PE-backed deals in data analytics?

The industry dynamics we’ve been discussing today are long-term, secular growth drivers that are likely to support significant continued private equity activity in the information services space. The amount of data available to companies around their operations, customers and markets will continue to grow; the analytics technologies will continue to become more powerful; and as a result, the need for data analytics businesses’ solutions should continue to accelerate. We’re certainly excited to continue investing in the space, and see a lot of opportunity going forward.

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Top Workplaces 2022: The Best Midsize Companies to Work for in Colorado

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As Consumers Play Larger Role in Healthcare Choices, Deal Opportunities Abound for Vestar

As Consumers Play Larger Role in Healthcare Choices, Deal Opportunities Abound for Vestar
PE Hub
By Aaron Weitzman
Published March 7, 2022

"Telehealth will increasingly become an integrated component of how care is delivered," Vestar's Mike Vaupen said.

PE Hub’s ongoing series on private equity firms investing in healthcare continues with insights from Mike Vaupen, who joined Vestar Capital Partners as managing director and co-head of healthcare in September. Previously, Vaupen was an investment professional at Welsh, Carson, Anderson & Stowe. Prior to that, he worked at Pamplona Capital Management, where he helped to establish the firm’s healthcare vertical, and also previously worked in the healthcare group at Oak Hill Capital Partners. Vaupen began his career in the healthcare investment banking division at Morgan Stanley. He outlined Vestar’s approach to healthcare investing.

Investment Strategy

“We identify the long-term mega trends that we believe will continue to shape and drive the healthcare sector over the next five, 10-plus years. We then work to target specific themes, sub-sectors, and business models that are aligned with these trends and are a good fit with our investment criteria,” Vaupen told PE Hub. “As one example, we identified consumerization as a key theme, as patients continue to act more like consumers of healthcare and play an increasingly active and informed decision-making role in their healthcare choices. That led to our investment in Friday Health Plans last year.”

Two main areas of focus for the firm are life sciences and virtual care. “We think both virtual care and life sciences have staying power and lasting implications for how these sectors will evolve, which creates investment opportunities,” he said.

“In the life sciences market, we are focused on technology that streamlines research and development of new drugs and enables digital engagement with patients and providers,” Vaupen explained.

“Virtual care has shown enormous promise and has become more widely accepted. Going forward, telehealth will increasingly become an integrated component of how care is delivered,” Vaupen said. “There will be less of a distinction between virtual care and in-person care. Patients will look to find convenient and tech-enabled ways to receive care. Providers will look for ways to reach more patients and solve their staffing challenges – virtual care addresses both of those issues.”

Merger of Tech and Healthcare

Vestar spends a lot of time at the intersection of technology and data in healthcare, as a number of the firm’s investments have been aligned to those themes, like Quest Analytics and Press Ganey.

Healthcare still has a long ways to ago when it comes to technology adoption, Vaupen explained.

“Electronic medical records, for example, were primarily designed to be digital versions of paper charts, so that was version 1.0 of moving healthcare from a paper-based industry to one that is digital,” he said. “As a result, the systems that were designed and implemented don’t interact well with each other, and that creates complications when trying to standardize data sets. There are structural challenges that prevent healthcare from moving faster in adopting technology and being able to harness the full value. We will get there, but it will take time.”

Standing Out From Competition

Longevity is a differentiating feature, Vaupen said.

"We have invested in the healthcare space for 20+ years, over multiple business and economic cycles and periods of technology innovation," he said. “More specifically, we aim to seek out opportunities where we are uniquely qualified to add value through a combination of our prior investment experience, domain expertise, industry relationships and creative approaches to growth. We also focus on being good partners to management teams and working alongside them to scale and build lasting and sustainable growth strategies.”

Regulatory Roadblocks

One of the reasons healthcare is different from other sectors is that it is highly regulated. Recently, the Department of Justice blocked the mega deal merger between United Health and Change Healthcare – which serves as a reminder that there can be regulatory roadblocks when investing in this space.

DOJ's blocking the deal serves as "a good reminder that the other aspect of healthcare that makes it challenging and complex, but also full of opportunity and potential, is the regulatory overlay,” Vaupen said. “As investors, we are always thinking about the regulatory environment, and we monitor it closely. Sometimes our investment themes are specifically designed to capitalize on regulatory trends and tailwinds. Where there are challenges, there is also opportunity.”

Firm Facts

Founded in 1988 and based in New York City, Vestar is a US mid-market private equity firm specializing in management buyouts and growth capital investments. Vestar invests in and collaborates with incumbent management teams and private owners to build long-term enterprise value, with a focus on consumer; business and technology services; and healthcare. The firm has invested over $8 billion in 84 companies – as well as more than 200 add-on acquisitions – with a total value of approximately $50 billion.

Recent Investments

Vestar invested in Friday Health Plans in 2021.

Recent Exits

Vestar partially exited Healthgrades in 2021 after investing in 2010. Vestar exited Civitas Solutions in 2019. Vestar exited Press Ganey in 2016. Vestar exited StayWell in 2016.


Vestar’s Healthcare Portfolio Highlights:

(Dates refer to initial investments.)

Accanto Health: A national healthcare company specializing in eating disorders and related disorders, with two nationally known brands, The Emily Program and Veritas Collaborative. (2015)
Friday Health Plans: A disruptive health insurer servicing the individual and small group markets. (August 2021)
Mercury Healthcare: A technology platform used by healthcare organizations to enable a frictionless healthcare journey through data-driven consumer and provider engagement. (2010)
Quest Analytics: Provides commercial software development and consulting services for hundreds of health plans, consultants and government agencies in the healthcare industry. (2017)

Headshot Norm Alpert

Private Equity Managers Expect Another Boom Year in 2022

S&P Global Market Intelligence, 13 January 2022 - Private equity deal-making and fundraising is expected to continue apace in 2022, although midmarket managers in both the U.S. and Europe are mindful of high valuations and inflationary pressures as they deploy record amounts of cash.

In total, 24,722 deals were announced in 2021 worth a disclosed aggregate $1.2 trillion, up from 17,618 deals worth just under half that amount the year before, according to S&P Global Market Intelligence data.

A record $1.32 trillion in dry powder sat in the asset class's coffers as of September 2021, according to Preqin's Alternatives in 2022 report. Fundraising is expected to remain strong, and limited partners are likely to maintain their focus on re-ups as established managers quickly return to market with larger vehicles, managers said.

Given the combination of available dry powder, the number of funds in market and the huge amount of interest in the asset class and its performance, it will be "a really strong year" for investments and exits, Pete Wilson, head of U.K. midmarket at pan-European manager IK Partners, said.

"Most private equity firms invest through the cycle — so while deploying, they are also exiting. And there's very little, in my view, that I can see that is going to change fundamentally this year to what we've seen over the last 12 months."

Deal-making comes with a price tag

While bullish on the deal-making outlook, managers are wary that the market is not free from risk. For both general partners and their investors, high valuations will be top of mind in 2022.

"What’s pushing valuations up? It's more demand. So, there's more volume pushing valuations up," Jason Barg, partner at U.S.-headquartered finance-focused buyout house Lovell Minnick Partners LLC, said. "I don’t foresee that there's going to be a lot of bargain shopping in 2022."

Clear business growth and value creation plans, sector expertise and sourcing bilateral deals are key in this environment, managers said.

If private equity firms have not got a value creation "playbook" at this point in time, it is going to feel quite hard to provide compelling answers to investors who are mindful of high valuations, Richard Swann, partner and member of U.K.-headquartered Inflexion Pvt. Equity Partners LLP's executive and investment committees, said.

Still, some managers expect growing valuations to moderate as central banks throttle back their pandemic stimulus measures. Norm Alpert, founding partner and co-president of U.S. midmarket investor Vestar Capital Partners LLC, said government stimulus "has been a mighty powerful source of driving valuations up, because there's just more liquidity globally searching for returns."

Now the U.S. Federal Reserve has signaled its intention to taper the bond purchases that infused cash into the economy during the pandemic and to tighten monetary policy by raising interest rates. "If global liquidity starts to stabilize and maybe even pull back, those are de-stimulative policies," Alpert added.

The costs of doing business

Macro factors including rising inflation, supply chain issues and talent are also being assessed. Managers are testing their assumptions, mitigating risks before buying into companies and evaluating existing business plans.

Following years of low interest rates, inflationary pressure is something "everybody is keeping their eye on," Lovell Minnick's Barg said.

Wage inflation, a knock-on effect of supply chain issues post-pandemic, has been the biggest surprise, Inflexion's Swann said. "We probably didn't collectively think there'd be a problem with haulage in the U.K. market or what the effects of working from home had on talent pools outside of London."

Many of Inflexion's portfolio companies are "not really constrained by the market," Swann said; rather, "they're constrained by the capacity of people and people driving technology. If you can't get the people, you can't grow."

Competition for talent is a cross-sector issue, IK's Wilson said. Losing a key team member can set business plans back considerably. "The cost is clear and easy and you can wrap your arms around that. But the time to re-recruit or find a new team — this is months or potentially a year that you lose, which is significant."

Tech-focused U.K. growth investor FPE Capital LLP has found rising demand for software services coupled with poaching in the industry has created a "tightness in the tech labor market," Managing Partner David Barbour said. Retaining and recruiting talent is something both it and all its companies "work very hard at," he added. "It's going to just become a bigger issue."

Morale is also a concern, Vestar's Alpert said, with workers just plain worn out.

"The impact on people's behavioral health and ability to maintain the pace is something that has been rearing its head and is only going to continue," Alpert said. Demographic trends around the number of people entering the workforce plus retirements are probably going to exacerbate it, and some companies will respond by shifting to more automation, he predicted.

Cautious optimism

Most managers Market Intelligence spoke with believe the momentum behind the asset class will continue to drive high levels of M&A activity.

Beyond significant volatility in interest rates, IK's Wilson said there were no obvious signs in the near term of a slowdown in activity because the supply/demand drivers will "continue to dictate that activity." Although inflation and labor pressures are "nontrivial challenges … they're not enough on their own to have such a big impact."

"There is a lot of momentum, and you've got a big population of private equity-owned deals. You've got a willingness of sellers to sell to private equity, you've got the capital there, you've got increased allocation," Mads Ryum Larsen, a managing partner and head of investor relations at IK Partners, said. There will be "hiccups" in valuations, and the stock market may see falling multiples, "but I think it's going to be shorter-term volatility rather than sort of a big trend change right now. I don't see that coming at least in near to midterm," Larsen said.

Vestar's Alpert is more cautious in his outlook. Years of "extraordinarily low" interest rates for an "extraordinarily long time" have spurred on a generally stable and consistently growing economic environment, which "tends to instill a lot of confidence in people's ability to forecast the future," he said.

"It's been this very sort of benign, self-supporting virtuous circle between exits, fundraising, more purchases, more exits, more fundraising, more purchases," he added. Alpert said he would not be surprised if 2022 is "more of the same" of what was seen last year, or if it is a more challenging year.

"Did going through the pandemic set up another long-term upcycle? Or are we going to be in for a challenging period sort of just dealing with the aftermath because it wasn’t a finite event?" Alpert said. "That's probably the thing I worry about first."

A tonal version of the Vestar Logo on a seafoam colored ground.

ILPA Releases Second Report in Diversity in Action Series

August 31, 2021 (Washington, D.C.) The Institutional Limited Partners Association (ILPA) today released the second report in its Diversity in Action – Sharing Our Progress series. The report series is an extension of ILPA’s Diversity in Action initiative and aims to provide actionable recommendations on steps that can be taken to improve diversity, equity and inclusion in private markets.

“The industry continues to respond positively to the Diversity in Action Initiative with new signatories joining every week,” said Steve Nelson, CEO of ILPA. “The Initiative now claims 180 signatories who have all been incredibly active in conversations with one another and have acted as tremendous partners to ILPA on our related work, having meaningfully contributed to our updated ILPA Diversity Metrics Template.”

The Diversity in Action – Sharing Our Progress report series tracks the evolution of Initiative signatories by geography, strategy and fund size as well as progress on adoption of all the actions within the Framework. As of August 2021, the Initiative’s geographic reach is increasing, now with 38 signatories outside North America, a 52% increase in this cohort since April.

The latest report focuses on how signatories are integrating diversity, equity and inclusion into investment strategies including in manager selection, due diligence and ongoing evaluation and monitoring. Of note:

  • DEI is clearly a focus beyond initial investment making decisions, with many signatories monitoring DEI on a recurring, annual basis – 58% of allocators and 45% of GPs are doing this. Signatories indicate that this information is being put to good use, both informing GPs’ value creation plans or shaping LPs’ future investment decisions
  • GPs have prioritized board diversity: 83% of GP signatories currently track gender diversity on portfolio company boards, 26% of GPs engage on diversity even where they do not have the ability to influence board appointments, and 24% of GP signatories have set board diversity targets
  • LPs remain focused on information gathering and qualitative assessments, still 21% of LP signatories indicate that progress on DEI will be considered as a factor in the decision to invest in a successor fund

“We’re pleased to bring awareness to how some of the industry’s leaders are approaching DEI through this ongoing report series,” added ILPA’s Managing Director of Industry Affairs and Diversity in Action initiative lead Jen Choi. “We’re hopeful that those who are just beginning their journey on DEI can take some actionable advice from the signatory insights in this report.”

The report also highlights proposed revisions to the ILPA Diversity Metrics Template. First released in 2018 as the industry’s first standard for capturing team-level diversity, the signatory group has provided input to help modernize the Template to reflect the current state of reporting in the market, as well as long-term goals for enhanced reporting. The Template is now out for public comment through September 24, 2021.

Media Contact:

Kari Grant
Director of Strategic Communications, ILPA
[email protected]

+1 416-941-9393

Team member Winston Song, with a collaged artistic background.

Behind the Buyouts: Song Serves Up Vestar’s Better-For-You Menu

May 5, 2021/The Deal / -- Welcome to Behind the Buyouts, The Deal’s podcast where we sit down with venture capitalists, private equity pros and company executives to drill down into their capital raising transactions and acquisitions.

This episode features Winston Song, managing director and co-head of the consumer group at New York-based private equity firm Vestar Capital Partners Inc., who talks about his role in the better-for-you foods business.

When Vestar Capital completed its investment in Dr. Praeger’s Sensible Foods Inc. in January, the maker of vegan, vegetarian, gluten free, soy free, Kosher and non-GMO foods was relatively well-known on the East Coast and West Coast.

Song said he sees potential for a much wider presence for Dr. Praeger’s as the idea of more well-balanced diet grows more mainstream.

“It’s a great brand but relatively low awareness outside the coasts and outside the vegan community,” Song said. “We plan to invest in new products and marketing and bring more consumers. … They’ve got great instincts.”

Song met the management of Dr. Praeger’s at a trade show several years ago and developed a relationship. His interest was also stoked after sampling its products with his young kids.

The firm’s track record reviving Birds Eye Foods Inc. resonated with the company and helped Vestar Capital prevail in a competitive sales process for Dr. Praeger’s.

“Our bread and butter has always been to find these underinvested brands that we think have a lot of potential and have really good leaders that just need more resources,” Song said.

The firm’s experience with natural foods also helped. One early example is its 1989 investment in tea maker Celestial Seasonings Inc., which it sold to Hain Food Group for $390 million in stock in 2000.

Having an authentic product story also really matters to consumers.  In the case of Simple Mills Inc., a Vestar portfolio company since 2019, Simple Mills founder Katlin Smith launched the company after she decided to improve her diet by renting out a commercial kitchen and creating her own baked mixes.

Vestar Capital continues to work to identify sustainable food trends instead of short-lived food fads, with the firm looking at low-sugar foods as a common thread for consumers interested in cutting out carbohydrates and sugar.

Here’s the podcast:


A tonal version of the Vestar logo on a dark blue ground.

Winston Song Featured on The Food Institute Podcast

Vestar Capital Partner’s Managing Director and Co-head of the Consumer Group, Winston Song, recently sat down with Brain Choi, CEO of The Food Institute Podcast, to share his insights on the “better-for-you” category and the top investment trends shaping the food industry.

Topics discussed include plant-based products, clean ingredients, baking trends, changing consumer behavior post-pandemic, and Vestar's new investment in Dr. Praeger's.

Please tune in to the podcast here.