Linden invests $40m in psychiatric health chain(3)

The Chicago-based, healthcare focused firm has acquired a controlling stake in Behavioral Centers of America, helping the chain to finance its expansion.

Chicago-based middle market buyout firm Linden has made a $40 million equity (€29 million) investment in Behavioral Centers of America, an operator of behavioral healthcare facilities in Ohio and Texas.

Linden vice president Andy Kuhn said that the investment would help BCA to build and acquire new facilities.

“We feel the access to capital and the access to our network and operating resources will help them to achieve that next level of growth,” Kuhn said. 

The investment is a controlling ownership stake, although Linden vice president Andy Kuhn said the firm will not be involved in the day-to-day operations of BCA.

“We’re really backing this management team,” Kuhn said. Linden was attracted to BCA due to the substantial industry experience of BCA’s executive team, in particular chief executive officer Ed Stack and chief financial officer Michael Davis, Kuhn said.

Stack founded the Behavioral Healthcare Corporation, an operator of psychiatric hospitals, in 1993. Starting with the acquisition of six hospitals from Hospital Corporation of America, grew the chain to 48 hospitals during his tenure. Welsh, Carson, Anderson and Stowe backed the company with $145 million in 2001, and changed its name to Ardent Health Services.

Davis was a vice president at Community Health Systems before joining BCA. Before, he was a chief financial officer with Essent Healthcare, and prior to that he was a co-founder of Behavioral Healthcare Corporation with Stack.

Linden makes investments in the healthcare and life sciences sectors. The firm closed its debut fund on $200 million in December of 2006. Its 12 portfolio companies include Ranir, a Grand Rapids, Michigan-based provider of oral care products, and Suture Express, a Lenexa, Kansas-based distributor of suture products. BCA is its fourth investment through the new fund.

The firm has a relationship with Madison Dearborn Partners, whose healthcare team coinvests with Linden on large deals.