Peloton Equity

Pioneers in Healthcare Growth Capital

About

New Firm, Pedigree of Success

Founded in 2014, Peloton Equity, LLC (Peloton) is a private equity firm dedicated to providing growth capital to innovative healthcare companies. In cycling, riding as a group, or “Peloton” as it is known, is the fastest and most efficient way to get to get to your goal. We believe the same principle applies to growth capital investing – by working with portfolio company management teams, fellow board members and investors, we believe we can help healthcare companies grow faster and create more value.

Peloton’s Founding Partners worked together for 14 years at Ferrer Freeman & Company (FFC), a firm that was among the pioneers in providing growth capital to healthcare companies. Peloton’s investment team brings over 75 years of combined healthcare industry experience and over 50 years of combined healthcare private equity investing experience. While at FFC and Peloton, the investment team was responsible for 28 portfolio company investments across the healthcare industry, of which 14 have been realized through company sales and 5 have been realized through IPOs. It is from this experience that Peloton draws its expertise in building market-leading, strategically valuable healthcare companies.

Peloton has developed a repeatable “value creation playbook” which the investment team has honed over the past decade. At the heart of the playbook lies a partnership between Peloton and the management teams of our portfolio companies to build great companies that can help transform healthcare and to drive strong investment returns for our investors.

Peloton’s vision is to combine the investment team’s pedigree of successfully investing in healthcare with the commitment to structured deal sourcing, portfolio management and investor relations that we believe are the hallmarks of a next generation institutional private equity firm.

Companies move faster, compete more effectively and create more value when the equity sponsor and management team harness the power of the ‘peloton’, the group in cycling that acts as an integrated unit to maximize performance

30 Portfolio Company Investments

$680+MM Invested

21 Exits, Including 5 IPOs

Investment Strategy

Investment Criteria

Peloton believes that lower middle market companies in healthcare continue to provide attractive investment opportunities as a result of the industry’s ongoing payment model transformation, innate complexities and evolving regulatory environment. We seek to identify companies and management teams that have the value proposition, executive leadership and strategic vision to become segment leaders in healthcare.

Peloton will focus on investments in companies across the major subsectors of healthcare – services, clinical products and IT/outsourced services – that we believe have several of the following characteristics:

Proven Business Model
Demonstrated market adoption, typically represented by $20 - 200 million in revenue and/or $(5) - 10 million of EBITDA at investment.
Market-tested value proposition
Provides higher quality care and/or lowers overall healthcare system costs.
Substantial growth opportunity
Well‐positioned for transformational revenue and profit growth (3-5x over the life of the investment).
Accomplished CEO & management team
Results‐oriented culture with accomplished and experienced management.
Sector where Peloton believes it can add meaningful value
Peloton’s team has successfully invested in similar businesses and/or has access to experts and customers to help the business achieve its growth objectives.

Peloton matches the structure of its investment to meet the company’s needs. We are comfortable investing in a control or minority position, however, we are typically the largest institutional shareholder with material governance rights when taking a minority position.

Value-Building Diligence & Investment Process

Peloton’s investment team employs a unique diligence and investment process that has been refined over 28 portfolio company investments in the healthcare industry. This repeatable process focuses on leveraging deep “fieldwork” and proprietary diligence sources to engender loyalty and respect with the target company and their management team, while building value in support of the company’s long-term growth plan and vision. There are several foundational tenets to this approach that we believe differentiate Peloton from other healthcare growth capital firms.

Relationship building

We follow companies over a long period of time to build a relationship with the management team and other stakeholders prior to a capital need.

Network

Peloton provides companies with access to proprietary diligence sources via our network of current and former executives/board members and industry experts that add value. We introduce potential investments to real customers, real partners and real executives throughout the diligence and investment process.

Experience

Peloton’s industry and investing experience helps enable us to say yes or no to an investment opportunity quickly.

Collaboration

Peloton’s diligence process focuses on “fieldwork” vs. third-party consultants to assess the company’s capabilities and market opportunity. We also partner with the management team throughout the process to develop and refine the long-term growth plan.

Value Creation Playbook

Philosophically, Peloton believes that at the growth stage where we invest, boards govern, management executes and investors partner with management to accelerate growth. Our experience accelerating growth includes investments in sales and marketing, an orientation toward investing in new products and services and M&A. Peloton believes moving portfolio companies to the right strategic position utilizing these initiatives will yield effective and strategic exit opportunities. We refer to this targeted program of investor‐directed strategy as the “Playbook”.

Establish organizational excellence

We take a targeted and deliberate approach to enhancing a company’s organization by:

Sourcing, evaluating and vetting nearly all major senior management hires;
Sourcing industry leaders from the Peloton network to sit on the board in a designated seat or in an independent board seat; and
Actively reviewing all compliance, audit and/or compensation policies and taking an active role on major board sub‐committees.

Develop and implement the growth plan

Prior to investing and throughout Peloton’s ownership, we work with management to develop the right growth plan to take advantage of a company’s market opportunity:

Collaborate with management to assess, refine and execute on specific growth initiatives;
Leverage our network to introduce portfolio companies to potential customers and other business development opportunities; and
Introduce the company to commercial/strategic partnership opportunities and help negotiate material relationships.

Advise on capital raises, M&A and de novo strategies

Peloton takes a leadership role in vetting and executing M&A and capital raising strategies, as well as evaluating and executing on de novo strategies for our portfolio companies. The current and former portfolio companies managed by the Peloton investment team have:

Acquired over 100 companies and evaluated hundreds more;
Raised $400+MM in debt capital; and
Completed 5 IPOs.

Position the company for a strategic exit or IPO

Peloton’s goal is to build lower middle market companies into strategically relevant businesses that are acquired by large healthcare companies, bigger private equity firms, or achieve liquidity via an initial public offering. In order to help portfolio companies achieve these strategic exits, we:

Work with senior management on defining and incentivizing long-term value creation initiatives from day 1;
Utilize our network to guide and refine the long‐term strategic plan;
Help develop liquidity strategies; and
In many cases, serve as the advisor or a co‐advisor to a portfolio company in a sale process.