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Leonard Green, Ares snap up CHG Healthcare

Leonard Green, Ares snap up CHG Healthcare

Private equity firms Leonard Green & Partners LP and Ares Management LLC have agreed to acquire control of hospital staffing company CHG Healthcare Services Inc from J.W. Childs Associates LP, a deal people familiar with the matter say could top $1 billion.

Founded in 1979, Salt Lake City-based CHG Healthcare is one of the country's largest healthcare staffing firms. It operates through the CompHealth, Weatherby Healthcare, RN Network and Foundation Medical Staffing brands.

Reuters reported last month that the company had around $100 million in annual earnings before interest, tax, depreciation and amortization (EBITDA) and that its owners hoped to get 11 times EBITDA in a sale.

Terms of the deal were not disclosed. A source familiar with the matter, while not disclosing the value of the deal, said buyout firm J.W. Childs Associates stood to make five times the money it invested to take over the company in 2006.

The deal is a boon to the $1.9 billion J.W. Childs Equity Partners III fund, which was launched in 2002 and is projected to return to its investors more than 2.5 times their money by the time it is wound down, the source added.

Announcing the deal on Monday, CHG said existing management would retain a significant equity interest in the company.

The sale is the latest sign of a buoyant market for secondary buy-outs -- sales by one private equity firm to another. U.S. leveraged buy-outs almost doubled in the third quarter of 2012 from a year ago, reaching their highest levels since before the financial crisis, as cheap financing fueled private equity's appetite for deals.

CHG was the first to introduce the concept of temporary or traveling physicians in the United States as a way to help doctors practicing in rural areas take breaks from their offices, according to its website.

The so-called traveling physicians provide healthcare facilities with a cost-effective option for filling staffing gaps, allowing them to offer patient care without having to hire additional full-time employees.

Goldman Sachs Group Inc advised CHG on the sale.

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