San Antonio, TX (PRWEB) October 9, 2009
First Capital Group, a Texas-based venture capital investment firm with offices in San Antonio and Dallas, closed the sale of one of its top-performing portfolio companies this week. The transaction culminated a seven-year investment in FairPay Solutions, Inc., one of the nation's premier specialty bill review companies offering enhanced workers' compensation cost containment services. FairPay Solutions was sold to The Riverside Companies, a global private equity firm focused on the smaller end of the middle market.
First Capital Group originated and served as the lead investor in the initial investment in FairPay in 2002. Since that time, FairPay has experienced significant growth in sales, earnings, and enterprise value.
While the selling price was not disclosed, the transaction was unique in that it was completed in the worst market for private equity buyers since the mid-1990s. Transaction prices for middle-market companies are generally based on multiples of the target companies' earnings before interest, taxes, depreciation, and amortization ("EBITDA"). According to industry statisitics published for 2008, the average middle-market transaction prices were 7.2 times annual EBITDA. Following the collapse of the credit and capital markets in the fourth quarter of 2008, EBITDA multiples being paid in middle-market transactions fell to 4.9 by the second quarter of 2009. The total cash consideration paid in the sale of FairPay Solutions was 7.2 times trailing 12-month EBITDA. First Capital Group's share of the total cash consideration exceeded 12 times its investment in the company.
About First Capital Group. First Capital Group (San Antonio and Dallas) is a venture capital firm that invests in a diversified portfolio of well-managed companies primarily in Texas and the Southwest, working with their management teams to help build value. As one of Texas' most established venture capital firms providing funds to this traditionally under-served geographic market, First Capital Group delivers more than 75 years' combined management experience to assist entrepreneurs in obtaining the capital they require to execute their business plans and the experienced counsel they need to help achieve their business objectives. Jeffrey P. Blanchard and James A. O'Donnell are the Members and owners of First Capital Group Management Company, LLC, which manages all of First Capital Group's investment funds. Formed in 1984, First Capital Group has consistently remained focused on a diversified investment strategy, enabling it to meet investors' needs for a lower-risk portfolio without compromising expected investment returns. First Capital Group originates and serves as a lead or principal investor in all of its transactions. For more information, please visit FirstCapitalGroup.com
About FairPay Solutions, Inc. FAIRPAY Solutions (Dallas) is a premier specialty bill review company offering enhanced workers' compensation cost containment services. FAIRPAY's proprietary, patent-pending Medical Analysis, Auditing and Repricing Services (MAARS.net) solution reprices bills by analyzing legal, financial, medical and actuarial data. The MAARS.net system complies with specific state statutes and precedents for workers' compensation bill review and contains data from more than 20 public and proprietary databases. FAIRPAY offers a suite of solutions to address the specialty bill review needs of workers' compensation and auto/liability payers. These solutions, supported by FAIRPAY's innovative technology and powered by the most comprehensive databases in the industry, result in accurate and fair pricing recommendations that deliver significant savings - risk free. For more information, please visit http://www.fairpaysolutions.com