Veronis Suhler Stevenson: A Look Back at 2019

Veronis Suhler Stevenson, known as VSS, was founded in 1981 as one of the first media sector-focused advisory firms. Today, it is a private investment firm focused on healthcare, business services, and the information industry.

In 1982, Jeffrey Stevenson joined the firm shortly after graduating from Rutgers. He has been with the company since then and became an official partner in 2001. Today, he is the company's managing partner.

Despite the changing landscape of the media industry, Veronis Suhler Stevenson has grown steadily over the years. Over the course of its funds, VSS has owned 84 companies and made over 350 add-on acquisitions. The transaction value of these deals was $16.5 billion, and the company had $3.5 billion in committed capital.

Today, VSS has managed seven funds: four equity funds, and three structured capital funds. It specializes in the lower middle market, which includes companies that have $3 million to $25 million in earnings before taxes. Under Stevenson's leadership, VSS provides financing for these companies to make acquisitions and pursue rapid growth.

"There is a void in the marketplace for those types of companies to obtain capital," Stevenson said.

Managing partner Stevenson announced the company’s decision to make a "significant growth investment" into a company called Endo1in early December of 2019. Endo1 is a specialty dental services company founded in Texas and California in early 2019 that offers back-office support to endodontists across the country. With the influx of investment, according to a press release, Endo1 is positioned to begin strategic acquisitions of similar practices.

“Our investment in Endo1 is well aligned with VSS’s strategy of championing experienced healthcare executives with flexible capital solutions to take their businesses to the next level,” Stevenson said.

In late November, Coretelligent, a company in the VSS portfolio, announced the acquisition of SoundView IT Solutions. Coretelligent provides managed IT and private cloud services. Soundview has been in business since 2009 and has significant experience with hedge funds, family offices, and corporations in the New York City area. Soundview offers managed services within the financial sector. According to company officials, this acquisition comes with the addition of 150 full-time employees. Ultimately, the acquisition should make Coretelligent an even stronger company that is more readily able to expand into the IT solutions arena.

VSS announced in October that it had made a minority investment in Powerhouse, which is headquartered in Crowley, Texas. Powerhouse provides nationwide construction services, retail store rollouts, and maintenance to a wide range of businesses. The company is involved in such diverse areas as healthcare, real estate, and convenience stores.

Also in October, VSS announced a partnership with Trivest to jointly invest in Quatrro Business Support Services. This is a provider of tech-enabled business process outsourcing services. Quatrro is located in Marietta, Georgia. The company services small businesses in the United States and Europe with outsourcing services like billing, finance, and payroll.

In April, Coretelligent, a VSS portfolio company, purchased United Technology Group. This company is involved in managing technology services like cybersecurity, professional services, as well as hardware and software sourcing. United Technology is one of the top cloud resellers in the Southeast with its office in Atlanta. Adding an office in Atlanta increased Coretelligent's nationwide reach. The merging of the two companies resulted in 140 full-time jobs.

In February, VSS announced that its portfolio company, TCC, had completed the acquisition of UConfirm. TCC is a Los Angeles-based tech services provider. UConfirm is a provider of income and employment verification services, offering employment verification data to lenders, pre-employment screeners, property managers, and social service agencies. UConfirm has an advanced data platform that fits in well with TCC's tax credit and incentive solutions business. Stevenson said that this acquisition would improve the growth trajectory of both businesses.

Then in June, Stevenson wrote an article for PE Hub explaining what he called "healthcare's pivotal digital moment." In the article, Stevenson discusses how health care officials – doctors, hospitals, and other healthcare providers – who are able to analyze data effectively from health records, claims, and clinical treatment will be more successful than those without that skillset. He says that the industry is making a transition from fee-for-service to value-based care. In the article, he makes the case for bringing healthcare fully into the digital age.

Also over the summer, Stevenson was featured in Mergers and Acquisitions, a publication dedicated to focusing on mid-market mergers. In the article, Stevenson says equity firms are becoming lenders in response to demands that private equity firms become more profitable.

Like all companies, it is not always about the acquisition. Early in the year, one of VSS's portfolio companies announced a sale. Southern Theaters sold Movie Tavern to Marcus Theatres. Movie Tavern is a restaurant that features movies with locations in nine states. Because of VSS's investment over the last few years, Movie Tavern was able to expand to other locations across nine states. The company being sold was much larger than it was when Southern Theatres bought it in 2013.

Stevenson says that the firm was specializing before it was popular, and he believes that the trend will only continue to accelerate. The middle market is attractive to VSS and Stevenson because it is the bottom of the pyramid, which means that there are more opportunities with smaller companies. He believes that the firm provides the capital to help those smaller companies grow. Sometimes, this means combining similar businesses, which can make companies even more valuable.

Excellent examples of this ‘middle market’ approach include two recent acquisitions.

In February, VSS announced a structured capital investment in Ascent Behavioral Health, a Utah-based program that offers six adolescent behavioral health programs throughout the state, including residential treatment, therapeutic boarding schools and wilderness therapy. These programs are all intended for teens with mental health issues such as depression, attachment disorder and anxiety. This acquisition was completed in partnership with Cimarron Healthcare Capital along with Monroe Capital, a private credit asset management firm.

Stevenson hopes the move will allow Ascent’s innovative programs to expand and create opportunities for future acquisitions of similar programs.

In early April 2020, VSS and NewSpring Health Capital, another private equity firm that focuses on health care strategies, announced an all-equity investment in BRC Recovery Family of Programs (BRC), a nationally-known addiction treatment services provider based in Austin, Texas. The new entity will be called BRC Healthcare, and will serve as a holding company for the BRC Recovery Family of Programs along with future acquisitions.

BRC offers customized gender-specific treatment for adults, including alcohol, drug dependence and general addiction disorders. It includes three residential care programs: BRC Recovery, Spearhead Lodge and Makana Path.