Cascadia Capital Identifies the Right Long-Term Financial Partner for Leader in Outsourced Radiology Services

Challenge

NightHawk Radiology Services is the leading provider of outsourced, after-hours radiology services to hospitals, radiology groups, and universities throughout the U.S. The company has exhibited strong financial results having grown revenue more than 100% year-over-year, while maintaining significant EBITDA margins. The founder/management group engaged Cascadia Capital to structure and negotiate a management-led buyout of the company that included providing liquidity for the majority shareholder, while maximizing management's pro forma ownership in the entity.

Solution

Cascadia Capital worked with the existing shareholders of NightHawk to design a structure that was a "win/win" for the management team and outside stakeholders. The transaction was difficult to structure given diverging interests across the different stakeholders. Cascadia Capital determined that a hybrid financing structure comprised of subordinated debt and preferred equity was the best fit for the company's financial and operating objectives. Once the repurchase transaction was underway, Cascadia Capital helped NightHawk navigate the many capital options available to finance the transaction, while leveraging its relationships with several blue-chip investors to accelerate the capital raising process and ultimately put forth the right long-term financial partner.

Results

Cascadia Capital successfully negotiated the purchase of the majority shareholder's stake while concurrently raising a combination of subordinated debt and equity capital to consummate the buyout. Within one month, Cascadia Capital obtained five competing term sheets from tier-one investors. Cascadia Capital leveraged the competitive process to maximize capital structure and enterprise value, thereby minimizing management's dilution resulting from the capital raising process.