2010 Year-End Review


We had a strong finish to 2010 with high activity levels in regards to both the portfolio and new platform opportunities. We were also relieved for the return of more normal and healthier financial markets after two years of severe dislocation and stress. The speed of the recovery in the leverage loan market is especially remarkable and we hope it is a sign of a strong economic recovery.

Regardless of market conditions, the basic tenets of Parthenon Capital Partners’ (“Parthenon”; investment strategy remain the same: we look to partner with strong management teams to build and grow service-based businesses with recurring revenues, defensible niches and competitive advantages. This strategy persevered in the downturn as our portfolio held up well and we were able to take advantage of opportunities to make numerous add-on acquisitions, effect transformative mergers and acquire new platform companies.

Over the past 12 months, we’ve closed on two new platform acquisitions, completed 20 synergistic add-on acquisitions and mergers across ten portfolio companies including transformative, large-scale mergers at three of our portfolio companies. Based on published data, we continue to be one of the most active middle market private equity firms. We expect this level of activity to continue throughout 2011.

Highlights include:

The acquisition of The Coding Source (“TCS”; and subsequent merger with Social Service Coordinators (“SSC”;www.sscincorporated.comwas the result of a multi-year effort to identify and establish a leader in revenue cycle management, including risk adjustment services, eligibility and enrollment services and clinical audit and compliance services, to health plans and risk-bearing provider groups. SSC is the leading provider of eligibility-based revenue cycle management services to health plans and its suite of technology-enabled eligibility, outreach, enrollment, retention and other services assures that clients and their members are engaged and appropriately reimbursed by the health care system. Meanwhile, TCS is a recognized leader in providing risk adjustment services to Medicare Advantage and Managed Medicaid plans and other clinical coding, audit, compliance and consulting services to provider organizations. The new company will be led by senior executives from both SSC and TCS, with Kevin Barrett, President and CEO, leading the combined company.

SSC/TCS is actively pursuing additional acquisitions to enhance its product and technology offerings with which to service its clients. In February 2011, Austin Provider Solutions (“APS”) was acquired. APS, through a robust SaaS analytics platform, provides healthcare plans with quality measurements (a/k/a medical outcomes) and chart abstractions.

AmWINS (, in which we originally invested during 2005 in partnership with CEO Steve DeCarlo and the executive team, has grown to become the largest wholesale insurance brokerage and major distributor of other insurance products including specialty MGA lines and group benefit programs. In 2010, AmWINS acquired Colemont Insurance Brokers, another large insurance broker which provides further geographic diversification, new customer relationships and a high growth international division. The combined company places over $4.8 billion in annual premiums with 1,800 employees in 16 countries. During Parthenon’s ownership, AmWINS has completed 15 acquisitions in its four primary lines of business while nearly tripling in profitability.

Triad Isotopes (“Triad”;, formed by Parthenon and management in late 2006, closed in May 2010 the acquisition of the U.S. radiopharmacy network formerly owned and operated by Covidien (ticker: COV). Triad’s market position almost tripled through this acquisition of 37 pharmacies with net sales of approximately $180 million. Triad has become the strong #2 player in this industry, which distributes radiopharmaceuticals for both diagnostic imaging and treatment of certain diseases. In four years, CEO Dom Meffe and Parthenon have transformed a small, owner/operated business into a national market leader while successfully managing through the patent expiration of a key product.

Outcast Media (“Outcast”; announced in February 2011 its merger with Health Club Media Network, a Parthenon portfolio company, and PumpTop TV in addition to a new growth equity investment from Parthenon. The combined company is a digital media company reaching active, on-the-go consumers with an audience of more than 68 million active consumers each month at health clubs and gas stations in 130 U.S. markets. These transactions enhance the company’s position in the fast-growing, place-based advertising industry and provide additional capital for growth. We are excited to be partnering with Outcast management, led by Matthew Stoudt and Nathan Gill, and existing Outcast shareholders in building the industry leader in the digital out-of-home market.

We sold Intermedix ( in August, after five years and nine acquisitions that created the largest provider of revenue cycle management and software solutions to the emergency medical industry. During our ownership, the company significantly expanded its service offering, addressable markets, technological leadership and value proposition while building out its infrastructure and tripling in size. Intermedix continues to be well-positioned for further growth, however it was time for us to realize the value created and allow the company to find a new partner for the next stage of its growth. We appreciated the opportunity to work with Doug Shamon and his talented management team and wish the Company and its new owners well.

We are also pleased to announce that Andrew Dodson was promoted to Partner and Brad Sloan was promoted to Principal. Andrew joined Parthenon in 2005 and is active in our financial services, insurance, software and environment services activities. Brad joined in 2006 and focuses on healthcare services.

We continue to focus on our core strategy of being a value-added partner to middle market growth companies in select industries including: financial and insurance services, healthcare and business services (particularly where companies have an intellectual property, technology or route-based advantage). Criteria for new platforms generally include recurring revenue streams, information or technology-intensive operations, attractive return-on-invested capital characteristics and the opportunity for Parthenon to differentiate itself from alternative equity providers. Most of our portfolio companies are acquisitive, with criteria for targets determined primarily by strategic, operational and cultural considerations. While we continue to be cautious on the depth and breadth of the economic recovery and the risk of political and regulatory vagaries, we think our significant experience in targeted sectors, resources to understand more complex situations, partnership focus and our long-term investment horizon both differentiate Parthenon in a tougher environment and allow us to confidently make new investments.

Thank you for your continued support and we look forward to working with you in 2011. Don’t hesitate to reach out to any member of the Parthenon Capital Partners team. And if in Boston or San Francisco, please stop by to see us.