EnvironeX Group Inc.: Behind The Exit With Persistence Capital Partners
On Oct. 31, Montreal and Toronto-based private equity firm, Persistence Capital Partners announced the acquisition of their portfolio company, EnvironeX Group Inc. by Eurofins Scientific (EUFI.PA), a global scientific leader in bioanalytical testing.
Québec-based EnvironeX Group is one of the largest analytical laboratories in Québec, with over 250 specialists and technicians, managers and professionals in the fields of environment, agri-food and pharmaceutical health.
Persistence Capital Partners (PCP) is Canada’s only private equity fund exclusively focused on high-growth opportunities in Canadian healthcare. As part of our ongoing series looking at transactions in Canadian private capital, we caught up with Stuart M. Elman, Managing Partner at PCP.
Why did PCP choose to initially invest in EnvironeX?
PCP had originally partnered with EnvironeX’s CEO, Marc Hamilton, in 2010 in a very successful Fund I investment—Laboratoire Biomedic Inc., which was sold to Gamma-Dynacare in late 2013. Within a year of that exit, Marc came back to PCP to discuss a new opportunity—EnvironeX. From PCP’s perspective, it was a rare opportunity to back a successful repeat entrepreneur in a highly profitable and growing industry with several potential add-on acquisitions.
Why did PCP choose to exit EnvironeX?
As part of our investment thesis for EnvironeX, we believed that we’d be able to create value by consolidating the market in the province of Québec. By creating the clear leader in Québec, a market that has historically been difficult to consolidate without a local presence, we anticipated that an international strategic competitor would be interested in entering the Québec market by acquiring a platform that was well positioned for continued growth.
Our efforts did not go unnoticed by various strategic players after having successfully consolidated the Québec market via two acquisitions (one of which was transformative—growing revenues more than five times (from the original base). We began receiving preemptive offers to acquire the company. Ensuring that we adhered to our fiduciary duty to maximize returns for our LPs, we were satisfied that we had accomplished our original investment thesis of creating the undisputed leader in Québec and had offers that recognized our efforts and maximized value.
How do you think this evolution of EnvironeX will enable it to continue to scale?
Eurofins is a global leader in this space and will no doubt provide the management team, along with the company’s customers, significant growth opportunities through new products, services and innovation, all the while maintaining the dedication to customer service that has been a hallmark of EnvironeX’s success.
How has the EnvironeX grown because of your firm’s initial investment?
With PCP’s support on several acquisitions, coupled with strong organic growth including the launch of several new products and services into new end markets, EnvironeX has grown revenues by 10 times since PCP’s initial investment.
“We began receiving preemptive offers to acquire the company. Ensuring that we adhered to our fiduciary duty to maximize returns for our LPs, we were satisfied that we had accomplished our original investment thesis of creating the undisputed leader in Québec and had offers that recognized our efforts and maximized value.”
What do you believe we can expect from EnvironeX and the bioanalytical testing sector in the next few years?
PCP believes that the testing sector will continue to see significant growth over the next number of years, and we would expect Eurofins/EnvironeX to continue to be leaders in the space.
What was your experience with the management team?
For the second time, it has been a privilege to collaborate and support a strong Québec entrepreneur in Marc Hamilton and his team, as they set new standards for innovation and service, allowing PCP to deliver outstanding returns to our investors. We wish them continued success as they become part of Eurofins, a global leader in the sector.
Do you see opportunities to invest in similar companies in the future?
PCP is always on the lookout for high-growth opportunities in the Canadian healthcare industry, particularly those led by strong entrepreneurs. Among the areas that PCP continues to look at is the testing/diagnostics space; we have invested in these types of businesses before and continue to believe that testing/diagnostics remains a compelling opportunity.