Why United Digestive swapped private equity partners and what's next

United Digestive recently partnered with private equity firm Kohlberg & Company, ending its partnership with Frazier Healthcare Partners, who created the platform in tandem with Atlanta Gastroenterology Associates in 2018.

United Digestive CEO Mark Gilreath and President Neal Patel, MD, spoke with Becker's to discuss why the company decided to choose a new private equity partner and what is next for the management services organization.

Question: What made you decide to find a new private equity partner?

Mark Gilreath: Private equity firms generally hold those portfolio companies for about five to seven years. I think that's average. When the company achieves the goals that were set out in the beginning then they typically will sell their position to the next sponsor. We achieved our goals ahead of plan. We've been really fortunate.

Q: How did you find the process with the current market conditions?

MG: It was tough. It's interesting that in these market conditions you hear the bankers and the private equity firms say, "Only good deals get done. Only the great assets are going to have a successful outcome in these market conditions." Thankfully, we had a number of potential investors and buyers that put us in that category of "great companies" and we've been very fortunate there.

Neal Patel: Ultimately, I think we've found the market to be robust for great assets. I think we and the market define that as highly integrated platforms with demonstrated income repair for physicians and creative growth through organic and [merger and acquisition] initiatives, and that's what we've experienced. 

Q: What's next for United Digestive?

NP: We expect to accelerate our growth significantly. We'll stay true to our core, we have numerous projects underway to support organic and merger and acquisition initiatives. Overall, it's a really exciting time at United Digestive as we have an eye toward entering new markets.

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