Select Rehabilitation provides physical, occupational and speech therapy services to patients residing in skilled nursing facilities. The company was founded in 1997 by a three person management team that successfully grew the business to employ over 1,000 licensed therapists at nursing facilities located in thirteen mid-western and mid-Atlantic states at the time of Caltius Mezzanine’s investment.
In 2004, the three founders sought to recapitalize the company to diversify their personal wealth, yet they wished to maintain operating control and limit dilution. As the company’s strong cash flow would continue to support its organic growth, the new capital would primarily be used for shareholder distributions. While other prospective investors hesitated at the prospect of funding such a large dividend, Caltius recognized that the company’s demonstrated ability to improve the efficiency and profitability of nursing facilities where it operated had created an enterprise value substantially in excess of the funded amount.
Caltius Mezzanine worked with the founders to develop an appropriate financing structure that allowed them to maximize their liquidity while limiting their dilution. Caltius Mezzanine’s financing was used to finance the shareholder dividend and to complete a pending acquisition.
“Caltius derived a creative financing structure that met our short and long term goals. We had better economic offers, but we were most comfortable with the Caltius team. They respect management and ran a smooth and painless due diligence process.”
Neal Deutsch, Chief Executive Officer, Select Rehabilitation