Acclaris
Acclaris is a technology enabled provider of consumer-driven healthcare claims processing. The Company uses a hybrid onshore/offshore strategy to process claims on behalf of large HR benefit managers.
We were introduced to Acclaris in the summer of 2008, just as the sub-prime meltdown was spreading to the financial markets as a whole. In the midst of an extremely uncertain environment, Acclaris was a uniquely attractive investment opportunity. The Company had a solid base of contracted client relationships and had just signed a significant new customer. It expected 40-50% growth, but needed capital to ramp support for its new client and bridge the gap to profitability on the existing base of business.
Acclaris tested the market for outside equity, but the combination of a small capital need and the concurrent economic environment limited the investor pool, and resulting value indications were unattractive.
Escalate worked collaboratively with both the management team and Updata Partners, the company’s lead investor, on a mezzanine structure that provided flexibility to allow the Company to focus on growth for 18-24 months before requiring any principal repayment. The $4.25M investment, consisting of a $4MM funded term loa and a $250,000 equity investment, closed in December 2009.
Acclaris executed flawlessly on its 2009 plan, meeting or exceeding expectations every quarter. In late 2009, the Company initiated an M&A process which culminated in a June 2010 majority recapitalization led by Staley Capital at an enterprise value well over 2x the valuations offered by investors 18 months earlier. While we at Escalate were thrilled with the return on this investment, the management team and investors were the most significant beneficiaries of the value created.