Morgan Stanley Capital Partners Agrees to Acquire Prescott’s

Rhea-AI Summary

Morgan Stanley Capital Partners (MSCP) has agreed to acquire Prescott's, a healthcare-focused specialty outsourced clinical engineering services provider, from Atlantic Street Capital. The company, headquartered in Monument, Colorado, provides medical equipment repair, maintenance services, and refurbished equipment solutions across the US and UK.

Current CEO Brian Straeb will continue leading the business. This marks MSCP's fourth investment in the Healthcare Outsourced Services sector, following investments in Clarity Software Solutions, US HealthConnect, and SpendMend since 2019.

Prescott's specializes in servicing critical surgical suite equipment including microscopes, infusion pumps, patient monitors, anesthesia machines, and sterilizers, serving health systems and outpatient facilities.

Positive

• Acquisition expands MSCP's healthcare services portfolio
• Retention of existing management team ensures operational continuity
• Strategic expansion into both US and UK markets
• Diversified revenue streams through repair, maintenance, and equipment sales

Negative

• None.

Insights

Financial Analyst

The acquisition of Prescott's by Morgan Stanley Capital Partners represents a strategic move into the growing healthcare services sector. The deal strengthens MSCP's healthcare portfolio, marking its fourth investment in Healthcare Outsourced Services. Prescott's business model is particularly attractive due to its recurring revenue stream from equipment maintenance and repair services, which are essential for healthcare facilities' operations. The company's presence in both the US and UK markets provides geographical diversification and expansion opportunities. The retention of current management, led by CEO Brian Straeb, suggests operational continuity and reduces integration risks. While financial terms weren't disclosed, the healthcare equipment maintenance sector typically commands strong margins due to the critical nature of services and high barriers to entry. This acquisition aligns with the broader industry trend of private equity firms targeting healthcare services companies with stable cash flows and growth potential.

Healthcare Industry Analyst

Prescott's acquisition is strategically significant in the healthcare equipment maintenance sector. Their focus on critical surgical suite equipment maintenance, including microscopes, infusion pumps and anesthesia machines, addresses a important need in healthcare operations. The company's services directly impact patient care quality and hospital efficiency by minimizing equipment downtime. The outsourced clinical engineering services market is experiencing growth as healthcare facilities increasingly prefer third-party maintenance solutions to reduce costs and improve efficiency. Prescott's comprehensive service offering, including equipment repair, maintenance and refurbished equipment sales, positions them well in this expanding market. MSCP's expertise in healthcare services and their operational support could accelerate Prescott's growth through both organic expansion and potential bolt-on acquisitions.

NEW YORK & MONUMENT, Colo.--(BUSINESS WIRE)-- Investment funds managed by Morgan Stanley Capital Partners (“MSCP”), the middle-market focused private equity team at Morgan Stanley Investment Management, have agreed to acquire Prescott’s, a leading healthcare focused specialty outsourced clinical engineering services provider, from Atlantic Street Capital. MSCP is partnering with the current management team led by CEO Brian Straeb, who will continue to lead the business.

Prescott’s provides medical equipment repair and maintenance service solutions, alongside refurbished equipment and parts sales and rentals for critical surgical suite modalities including microscopes, infusion pumps, patient monitors, anesthesia machines and sterilizers. Headquartered in Monument, Colorado, Prescott’s serves health systems, outpatient facilities and other care settings across the United States and the UK.

Steve Rodgers, Managing Director and Head of Healthcare Investing at MSCP, said: “We are excited to partner with the Prescott’s team as they continue building a best-in-class platform in outsourced clinical engineering services for critical surgical suite equipment. Prescott’s timely repair and maintenance services enable continuity of care and avoid costly equipment downtime. This investment represents our continued effort to invest in high-quality healthcare focused outsourced services businesses.”

Straeb said: “We are excited to partner with the MSCP team for the next chapter of our growth. MSCP has been actively tracking the outsourced clinical engineering space for several years and has a deep understanding of the industry and various business models. MSCP engaged their operations team early in the process as they recognized the importance of looking at value creation from multiple angles. This made them an ideal partner to contribute meaningfully to our strategic efforts both organically and inorganically so that we can hit the ground running immediately post close.”

MSCP’s acquisition of Prescott’s will be its fourth investment in the Healthcare Outsourced Services sector. Since 2019, MSCP has invested in health plan communications solutions provider, Clarity Software Solutions, pharma education and marketing solutions provider, US HealthConnect and health system cost cycle management provider, SpendMend.

Closing is subject to customary closing conditions.

Dechert acted as legal counsel, Alvarez and Marsal acted as QoE, Tax and Operations advisor, and Cascadia Capital acted as financial advisor to MSCP. Kramer Levin acted as legal counsel and Harris Williams (lead advisor) and Houlihan Lokey acted as financial advisors to Prescott’s and Atlantic Street Capital.

About Prescott’s
Founded in 1984, Prescott’s is a leading provider of healthcare medical equipment repair and maintenance service solutions, alongside refurbished equipment & parts sales, and rentals. Prescott’s helps healthcare providers reduce equipment downtime, simplify equipment management, and reduce repair and maintenance costs. The Company covers critical surgical suite equipment modalities including surgical microscopes, infusion pumps, patient monitors, anesthesia machines and sterilizers. Prescott’s services health systems, outpatient facilities, clinics, and other care settings nationwide and in the UK through a differentiated workforce of repair technicians. For more information, please visit the Company’s website https://prescottsmed.com/.

About Morgan Stanley Capital Partners
Morgan Stanley Capital Partners, part of Morgan Stanley Investment Management, is a leading middle-market private equity platform established in 1986 that focuses on privately negotiated equity and equity-related investments primarily in North America. Morgan Stanley Capital Partners seeks to create value in portfolio companies primarily in a series of subsectors in the business and consumer, healthcare, and industrial services markets with an emphasis on driving significant organic and acquisition growth through an operationally focused approach. For further information about Morgan Stanley Capital Partners, please visit www.morganstanley.com/im/capitalpartners.

About Morgan Stanley Investment Management
Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,400 investment professionals around the world and $1.6 trillion in assets under management or supervision as of September 30, 2024. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. For further information about Morgan Stanley Investment Management, please visit www.morganstanley.com/im.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241209554471/en/

Press Contacts

Morgan Stanley: Alyson Barnes

alyson.barnes@morganstanley.com

Source: Morgan Stanley Capital Partners

FAQ

What is the acquisition target of Morgan Stanley Capital Partners (MS) in 2024?

Morgan Stanley Capital Partners is acquiring Prescott's, a healthcare-focused specialty outsourced clinical engineering services provider, from Atlantic Street Capital.

What services does Prescott's provide under Morgan Stanley (MS) acquisition?

Prescott's provides medical equipment repair, maintenance services, refurbished equipment sales, parts sales, and rentals for surgical suite equipment including microscopes, infusion pumps, patient monitors, anesthesia machines, and sterilizers.

How many healthcare outsourced services investments has Morgan Stanley Capital Partners (MS) made?

This is MSCP's fourth investment in the Healthcare Outsourced Services sector since 2019, following investments in Clarity Software Solutions, US HealthConnect, and SpendMend.