The firm, with approximately 400 employees, is a public health service organization providing solutions in clinical and biomedical research, epidemiology, health policy, and program evaluation.
SSS was purchased for $70 million in cash, or $63 million net of transaction-related tax benefits worth $7 million on a net present value basis.
DLH financed the acquisition through a new five-year, $95 million, secured bank credit facility. First National Bank of Pennsylvania acted as agent, and F.N.B. Capital Markets and M&T Bank acted as joint lead arrangers. The facility is comprised of a syndicated term loan of $70 million and revolving credit facility of $25 million.
The acquisition price and transaction expenses were funded by the term loan plus cash reserves of DLH, with the revolver available to support future cash needs. The interest rate applicable to borrowings is LIBOR plus a spread, based on the consolidated leverage ratio of DLH; at closing, the interest rate was 6.42%. Additional terms of the transaction and financing arrangements will be available in the Company’s SEC filings.
DLH estimates that SSS will contribute approximately $65 million, on an annualized basis, to revenue of the Company going forward.
“This is an exciting addition to DLH and one that aligns perfectly with our strategy to expand the company’s Public Health & Life Sciences focus area, diversifying our portfolio and bringing scale to support growth,” said Zachary Parker, DLH president & CEO.
KippsDeSanto served as financial advisor to DLH. Hogan Lovells US, and Becker & Poliakoff served as legal advisors to DLH as part of this transaction. The Avascent Group, Baker Tilly, and the Lockton Companies provided consulting services to DLH.
Houlihan Lokey served as financial advisor to SSS. Saul Ewing Arnstein & Lehr served as legal advisor to SSS.