The $175 million acquisition of Reno's Alere Medical Inc. comes as some of the early investors in the fast-growing company looked to take some money off the table.
And it reflects the belief of TA Associates, the Boston-based private equity company that led the buyout, that Alere Medical can continue a growth pace that consistently ranks tops among the nation's privately held companies.
Alere provides disease-management services, mostly to group health plans, for chronic, high-costs diseases such as asthma, heart failure and diabetes.
Working from call centers around the country, Alere's registered nurses keep in touch with patients who use electronic gear that monitors their condition and transmits it to Alere's staff.
The company serves about 84,000 people from centers at Reno, Denver, San Antonio and Columbus, Ohio. It employs about 175 in Reno.
Alere had been on the radar of TA Associates for several years, and executives of the private equity firm had met with Ron Geraty, the doctor who's the president and chief executive officer of Alere, to express their interest in pursuing a deal when the time was right.
"We have a very proactive approach. We are always on the lookout for growing, inter-esting companies," said Jennifer McAuliffe Mulloy, a principal in TA Associates.
She said the timing for a deal became right in recent months as some of the early-stage investors in Alere wanted to cash out.
"It was a natural point in the company's history to do a recapitalization," Mulloy said.
Among the investors cashing out was MTS Health Investors of New York City, a private equity firm that specializes in health care.
It came on board when it provided the equity financing that allowed Alere to acquire the disease-management business of PacifiCare of California in 2005 one of the largest steppingstones in Alere's development.
The newly disclosed deal that TA Associates put together is a partnership between the private equity firm and the management team of Alere, which will remain in place.
Geraty said the deal made sense for Alere's management because TA brings a management-friendly style and a significant network of contacts to the business.
Nevada Ventures LLC, the Reno-based venture capital firm that was among the early investors in Alere Medical, will retain a portion of its equity stake under the new ownership structure.
Robb Smith, the managing partner of Nevada Ventures, said the transaction marked "a pretty good outcome" for investors in the venture fund. Nevada Ventures made its first investment in Alere in 2000, four years after Alere was founded.
Smith said Nevada Ventures decided to cash out a portion of its investment partly because it sees a changing competitive landscape for Alere with consolidation in the disease-management industry.
"It was not an inappropriate time to consider our exit," he said.
While the company's growth has been strong its 309 percent three-year growth rate landed it spots on the Inc. list of 500 fastest-growing companies list in 2004, 2005 and 2006 Mulloy said TA Associates believes its resources can help Alere expand its services and client base.
Richard Tadler, a managing director of TA Associates who will join the Alere board along with Mulloy, said potential growth markets include government programs including Medicare Advantage and Medicaid.
TA Associates, which was founded in 1968, manages about $10 billion in capital and has investments in more than 370 companies.
