Equity firms to buy seller of used medical equipment
SterilMed of Maple Grove sells "reprocessed" devices, which are in demand as health care providers look to save money.

By Wendy Lee, Star Tribune

SterilMed Inc., a Maple Grove company that sells reprocessed medical devices and small equipment repair services to health care providers, said Friday that it is being sold to two private equity firms.

Great Hill Partners of Boston and Primus Capital Fund of Cleveland will pay in the ballpark of $200 million for the 700-employee company, according to a person familiar with the deal.

Great Hill partner Mark Taber said SterilMed operates in an area of interest to the firm and is one of the better-run companies he's seen.

"We're very interested in both health care cost containment as well as reducing overall waste, both of which the company does," Taber said. "All of those factors made it an intriguing transaction for us."

SterilMed is the second-largest company in the market for reprocessed medical devices, according to Millennium Research Group. Ascent Healthcare Solutions, the leader in the area, was purchased for $525 million by medical technology company Stryker Corp. last year.

"With the economic downturn and overall pressures on pricing in the health care system, this is an area that facilities are increasingly using to help with their budget constraints," said Tiffanie Demone, a senior analyst at Millennium Research Group. Reprocessed medical devices in general are sold at half the price of new ones, she added.

SterilMed was founded in 1997 and has annual revenue of more than $100 million. Brian Sullivan, the company's CEO and chairman, led an investment group that gained a majority interest in 2003.

Sullivan said the company started looking for buyers at the beginning of this year, with more than 55 businesses submitting proposals. Sullivan said he plans to remain as chairman but will retire as CEO once he finds his replacement.

Analysts also said SterilMed's purchase was a sign the mergers and acquisitions market is improving.

"The M&A market overall, it's gone from a stop-dead-nothing-happening [during] this time last year to an extremely active market," said Ken Higgins, a managing director at investment banking firm Greene Holcomb & Fisher.